Q20001678660--12-31falsehttp://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet0001678660srt:MaximumMember2024-06-3000016786602023-01-012023-03-310001678660us-gaap:RestrictedStockUnitsRSUMember2023-12-310001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2023-04-012023-06-300001678660prld:TwoThousandTwentyEmployeeStockPurchasePlanMember2024-01-010001678660prld:TwoThousandTwentyOneShelfRegistrationMember2024-01-012024-06-300001678660us-gaap:RetainedEarningsMember2024-04-012024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2023-03-3100016786602023-10-012023-12-310001678660us-gaap:AdditionalPaidInCapitalMember2022-12-310001678660us-gaap:RetainedEarningsMember2024-03-310001678660us-gaap:RestrictedStockMember2023-04-012023-06-300001678660us-gaap:CommonStockMembersrt:MaximumMember2024-01-012024-06-300001678660prld:LicenseAgreementMembersrt:MaximumMember2024-05-012024-05-310001678660us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2023-12-310001678660prld:AgencySecurityMember2024-06-300001678660us-gaap:CorporateDebtSecuritiesMember2023-12-310001678660us-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001678660us-gaap:RestrictedStockMember2023-01-012023-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660prld:LicenseAgreementMembersrt:MaximumMember2024-05-310001678660us-gaap:CommonStockMember2023-04-012023-06-300001678660us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-06-300001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001678660us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001678660us-gaap:CommonStockMember2024-01-012024-06-300001678660us-gaap:RestrictedStockMember2023-01-012023-06-3000016786602022-07-012022-09-300001678660us-gaap:RestrictedStockMember2024-06-3000016786602022-12-310001678660prld:TwoThousandTwentyEmployeeStockPurchasePlanMember2024-06-300001678660us-gaap:EmployeeStockOptionMember2024-04-012024-06-300001678660us-gaap:EmployeeStockOptionMember2023-01-012023-06-3000016786602024-03-310001678660prld:ExercisePriceRangeThreeMember2024-01-012024-06-300001678660prld:AgencySecurityMember2023-12-310001678660us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2024-03-310001678660prld:TwoThousandTwentyEmployeeStockPurchasePlanMember2023-01-012023-06-300001678660us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300001678660us-gaap:RestrictedStockUnitsRSUMember2024-06-300001678660prld:PreFundedWarrantsMemberus-gaap:PrivatePlacementMemberprld:VotingCommonStockMember2023-12-310001678660prld:PreFundedWarrantsMember2024-06-300001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2023-03-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001678660us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001678660us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660prld:TwoThousandTwentyEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-06-300001678660prld:MarketableSecuritiesMember2024-06-300001678660us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660prld:TwoThousandTwentyFourShelfRegistrationMember2024-06-300001678660us-gaap:RestrictedStockMember2024-04-012024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001678660us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:RetainedEarningsMember2023-12-310001678660prld:ExercisePriceRangeFourMember2024-01-012024-06-300001678660us-gaap:RetainedEarningsMember2024-06-300001678660us-gaap:EmployeeStockOptionMember2024-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2023-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2023-04-012023-06-300001678660us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:RestrictedStockMember2023-12-310001678660prld:PreFundedWarrantsMemberprld:VotingCommonStockMember2023-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660prld:JefferiesLlcMemberprld:OpenMarketSalesAgreementMember2024-06-300001678660us-gaap:EmployeeStockOptionMember2023-04-012023-06-300001678660us-gaap:RetainedEarningsMember2024-01-012024-03-310001678660prld:ExercisePriceRangeOneMember2024-01-012024-06-300001678660us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2023-12-310001678660prld:VotingCommonStockMember2023-12-310001678660prld:ExercisePriceRangeFourMember2024-06-300001678660prld:ChestnutRunLeaseMember2024-06-300001678660us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-06-300001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001678660us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-06-3000016786602024-01-012024-06-300001678660us-gaap:EmployeeStockOptionMember2024-01-012024-06-300001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2024-04-012024-06-300001678660prld:LicenseAgreementMember2024-06-300001678660prld:ChestnutRunLeaseMembersrt:ProFormaMemberus-gaap:LetterOfCreditMember2024-06-300001678660prld:ExercisePriceRangeThreeMember2024-06-300001678660us-gaap:CommonStockMember2023-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2023-12-310001678660prld:MarketableSecuritiesMember2023-12-310001678660prld:JefferiesLlcMembersrt:MaximumMemberprld:OpenMarketSalesAgreementMember2023-03-3100016786602023-12-310001678660prld:JefferiesLlcMembersrt:MaximumMemberprld:OpenMarketSalesAgreementMember2023-03-012023-03-310001678660us-gaap:RestrictedStockMember2024-01-012024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2023-06-300001678660prld:PreFundedWarrantsMember2023-12-310001678660us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660prld:TwoThousandTwentyEquityIncentivePlanMembersrt:MaximumMember2024-01-012024-06-300001678660us-gaap:RetainedEarningsMember2023-06-300001678660us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001678660prld:TwoThousandTwentyEquityIncentivePlanMember2024-06-300001678660us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2022-12-310001678660prld:ExercisePriceRangeTwoMember2024-01-012024-06-300001678660us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001678660us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-06-300001678660prld:TwoThousandTwentyEmployeeStockPurchasePlanMember2024-01-012024-06-300001678660us-gaap:NonvotingCommonStockMember2023-12-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001678660us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2024-06-300001678660us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-06-300001678660us-gaap:EmployeeStockOptionMember2023-01-012023-06-300001678660us-gaap:AdditionalPaidInCapitalMember2024-06-300001678660prld:TwoThousandTwentyOneShelfRegistrationMember2024-06-300001678660us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001678660prld:TwoThousandTwentyFourShelfRegistrationMember2024-01-012024-06-300001678660us-gaap:RetainedEarningsMember2023-01-012023-03-310001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2023-06-300001678660us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2023-12-3100016786602024-04-012024-06-300001678660us-gaap:GeneralAndAdministrativeExpenseMember2024-04-012024-06-300001678660srt:MaximumMemberprld:TwoThousandTwentyEmployeeStockPurchasePlanMember2024-01-012024-06-300001678660us-gaap:ResearchAndDevelopmentExpenseMember2024-04-012024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2024-03-310001678660us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000016786602023-01-012023-06-300001678660us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2024-06-300001678660prld:TwoThousandTwentyEquityIncentivePlanMembersrt:MinimumMember2024-01-012024-06-300001678660us-gaap:CorporateDebtSecuritiesMember2024-06-3000016786602023-03-3100016786602024-01-012024-03-310001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2024-01-012024-03-310001678660us-gaap:NonvotingCommonStockMember2024-06-300001678660us-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2022-12-310001678660us-gaap:EmployeeStockOptionMember2024-01-012024-06-300001678660prld:VotingCommonStockMember2024-06-300001678660prld:ChestnutRunLeaseMember2024-01-012024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2023-01-012023-03-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-3100016786602023-03-012023-03-310001678660us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-3100016786602023-06-300001678660prld:ChestnutRunLeaseMemberus-gaap:LetterOfCreditMember2024-06-300001678660us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660us-gaap:AdditionalPaidInCapitalMember2024-03-310001678660us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001678660prld:TwoThousandTwentyFourShelfRegistrationMember2024-05-3100016786602024-06-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2023-03-3100016786602023-04-012023-06-300001678660us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:CommonStockMembersrt:MinimumMember2024-01-012024-06-3000016786602024-08-070001678660us-gaap:RetainedEarningsMember2023-03-3100016786602023-01-012023-12-310001678660us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660prld:TwoThousandTwentyOneShelfRegistrationMember2021-11-300001678660us-gaap:CommonStockMemberprld:VotingCommonStockMember2023-12-310001678660prld:LicenseAgreementMember2024-05-012024-05-310001678660us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001678660us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001678660us-gaap:RestrictedStockMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-06-300001678660prld:TwoThousandTwentyEquityIncentivePlanMember2024-01-010001678660prld:TwoThousandTwentyEquityIncentivePlanMember2024-01-012024-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2024-06-300001678660prld:ExercisePriceRangeOneMember2024-06-300001678660us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberprld:AgencySecurityMember2023-12-310001678660us-gaap:RetainedEarningsMember2023-04-012023-06-300001678660us-gaap:RetainedEarningsMember2022-12-310001678660us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-012024-06-300001678660prld:ExercisePriceRangeTwoMember2024-06-30xbrli:pureutr:sqftxbrli:sharesprld:Securityiso4217:USDxbrli:sharesiso4217:USDprld:Extensionprld:Plan

 

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 June 30, 2024

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.)

175 Innovation Boulevard

Wilmington, Delaware

19805

(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

 

Nasdaq Global Select Market

 

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 August 7, 2024, the registrant had 55,024,470 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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRELUDE THERAPEUTICS INCORPORATED

BALANCE SHEETS

 

(in thousands, except share data)

 

June 30,
2024

 

 

December 31,
2023

 

Assets

 

(unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,828

 

 

$

25,291

 

Marketable securities

 

 

152,016

 

 

 

207,644

 

Prepaid expenses and other current assets

 

 

2,870

 

 

 

2,654

 

Total current assets

 

 

182,714

 

 

 

235,589

 

Restricted cash

 

 

4,044

 

 

 

4,044

 

Property and equipment, net

 

 

7,554

 

 

 

7,325

 

Operating lease right-of-use asset

 

 

29,574

 

 

 

30,412

 

Other assets

 

 

405

 

 

 

295

 

Total assets

 

$

224,291

 

 

$

277,665

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,170

 

 

$

4,580

 

Accrued expenses and other current liabilities

 

 

11,426

 

 

 

15,768

 

Deferred revenue

 

 

3,000

 

 

 

 

Operating lease liability

 

 

2,232

 

 

 

1,481

 

Finance lease liability

 

 

507

 

 

 

 

Total current liabilities

 

 

23,335

 

 

 

21,829

 

Other liabilities

 

 

3,215

 

 

 

3,339

 

Operating lease liability

 

 

15,465

 

 

 

15,407

 

Total liabilities

 

 

42,015

 

 

 

40,575

 

Commitments (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 42,158,224 and 42,063,995 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

4

 

 

 

4

 

Non-voting common stock, $0.0001 par value: 12,850,259 shares authorized; 12,850,259 shares issued and outstanding at both June 30, 2024 and December 31, 2023

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

705,122

 

 

 

693,252

 

Accumulated other comprehensive (loss) income

 

 

(290

)

 

 

223

 

Accumulated deficit

 

 

(522,561

)

 

 

(456,390

)

Total stockholders’ equity

 

 

182,276

 

 

 

237,090

 

Total liabilities and stockholders’ equity

 

$

224,291

 

 

$

277,665

 

 

See accompanying notes to unaudited interim financial statements.

1


 

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands, except share and per share data)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

29,509

 

 

$

24,966

 

 

$

56,918

 

 

$

46,800

 

General and administrative

 

 

7,655

 

 

 

7,432

 

 

 

14,589

 

 

 

14,713

 

Total operating expenses

 

 

37,164

 

 

 

32,398

 

 

 

71,507

 

 

 

61,513

 

Loss from operations

 

 

(37,164

)

 

 

(32,398

)

 

 

(71,507

)

 

 

(61,513

)

Other income, net

 

 

2,424

 

 

 

1,967

 

 

 

5,336

 

 

 

3,364

 

Net loss

 

$

(34,740

)

 

$

(30,431

)

 

$

(66,171

)

 

$

(58,149

)

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock, basic and diluted

 

$

(0.46

)

 

$

(0.54

)

 

$

(0.87

)

 

$

(1.12

)

Weighted average common shares outstanding, basic
   and diluted

 

 

75,762,152

 

 

 

56,240,491

 

 

 

75,748,989

 

 

 

52,012,330

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,740

)

 

$

(30,431

)

 

$

(66,171

)

 

$

(58,149

)

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

 

 

(55

)

 

 

(313

)

 

 

(513

)

 

 

981

 

Comprehensive loss

 

$

(34,795

)

 

$

(30,744

)

 

$

(66,684

)

 

$

(57,168

)

 

See accompanying notes to unaudited interim financial statements.

2


 

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, 2024

 

 

42,063,995

 

 

$

4

 

 

 

12,850,259

 

 

$

1

 

 

$

693,252

 

 

$

223

 

 

$

(456,390

)

 

$

237,090

 

Issuance of common stock upon exercise of stock options & vesting of RSUs, net of 4,285 shares withheld for employee taxes

 

 

7,510

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

(14

)

Unrealized loss on marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(458

)

 

 

 

 

 

(458

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,547

 

 

 

 

 

 

 

 

 

5,547

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,431

)

 

 

(31,431

)

Balance at March 31, 2024

 

 

42,071,505

 

 

$

4

 

 

 

12,850,259

 

 

$

1

 

 

$

698,785

 

 

$

(235

)

 

$

(487,821

)

 

$

210,734

 

Issuance of common stock upon exercise of stock options & vesting of RSU's, net of 3,722 shares withheld for employee taxes

 

 

7,803

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

 

 

(16

)

Issuance of common stock under ESPP

 

 

78,916

 

 

 

 

 

 

 

 

 

 

 

 

255

 

 

 

 

 

 

 

 

 

255

 

Unrealized loss on marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

 

 

 

(55

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,098

 

 

 

 

 

 

 

 

 

6,098

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,740

)

 

 

(34,740

)

Balance at June 30, 2024

 

 

42,158,224

 

 

$

4

 

 

 

12,850,259

 

 

$

1

 

 

$

705,122

 

 

$

(290

)

 

$

(522,561

)

 

$

182,276

 

See accompanying notes to unaudited interim financial statements.

3


 

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, 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

 

See accompanying notes to unaudited interim financial statements.

4


 

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six months ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

Cash flows used in operating activities:

 

 

 

 

 

 

Net loss

 

$

(66,171

)

 

$

(58,149

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

878

 

 

 

559

 

Noncash lease expense

 

 

811

 

 

 

874

 

Stock-based compensation

 

 

11,645

 

 

 

12,989

 

Amortization of premium and discount on marketable securities, net

 

 

(2,873

)

 

 

(805

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(216

)

 

 

(2,540

)

Accounts payable

 

 

1,708

 

 

 

(1,333

)

Deferred revenue

 

 

3,000

 

 

 

 

Accrued expenses and other liabilities

 

 

(4,466

)

 

 

(4,493

)

Long-term prepaid expenses and other long-term assets

 

 

 

 

 

(4,010

)

Operating lease liabilities

 

 

836

 

 

 

(894

)

Net cash used in operating activities

 

 

(54,848

)

 

 

(57,802

)

Cash flows provided by investing activities:

 

 

 

 

 

 

Purchases of marketable securities

 

 

(13,372

)

 

 

(128,134

)

Proceeds from maturities of marketable securities

 

 

71,360

 

 

 

72,500

 

Purchases of property and equipment

 

 

(648

)

 

 

(1,793

)

Net cash provided by (used in) investing activities

 

 

57,340

 

 

 

(57,427

)

Cash flows used in financing activities:

 

 

 

 

 

 

Payment of offering costs

 

 

(84

)

 

 

 

Proceeds from issuance of common stock and pre-funded warrants, net of offering costs

 

 

 

 

 

110,691

 

Proceeds from the issuance of common stock under ESPP

 

 

255

 

 

 

348

 

Proceeds from the issuance of common stock in connection with the exercise of stock options

 

 

4

 

 

 

31

 

Payment of withholding taxes related to stock-based compensation to employees

 

 

(34

)

 

 

 

Principal payments on finance lease liabilities

 

 

(96

)

 

 

 

Net cash provided by financing activities

 

 

45

 

 

 

111,070

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

2,537

 

 

 

(4,159

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

29,335

 

 

 

34,649

 

Cash, cash equivalents, and restricted cash at end of period

 

$

31,872

 

 

$

30,490

 

 

 

 

 

 

 

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

Property and equipment in accounts payable and accrued expenses and other current liabilities

 

$

19

 

 

$

30

 

Offering costs in accrued expenses and other current liabilities

 

$

 

 

$

67

 

Offering costs in accounts payable

 

$

26

 

 

$

201

 

Unrealized (loss) gain on marketable securities

 

$

(513

)

 

$

981

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited interim financial statements.

5


 

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1. Background

Prelude Therapeutics Incorporated (the “Company”) is a clinical-stage fully integrated oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients. Since beginning operations in 2016, the Company has devoted substantially all its efforts to research and development, conducting preclinical and clinical studies, recruiting management and technical staff, administration, and raising capital.

2. Risks and liquidity

The Company faces a number of risks common to early-stage companies in the biotechnology industry. Principal among these risks are the uncertainties in the development process, development of the same or similar technological innovations by competitors, protection of proprietary technology, dependence on key personnel, compliance with government regulations and approval requirements, and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, adequate protection for the Company’s technology will be obtained, any products developed will obtain necessary government regulatory approval, or any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

Since its inception, the Company has incurred operating losses and had an accumulated deficit of $522.6 million at June 30, 2024. The Company has no product revenue to-date and devotes its efforts to research and development. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

The Company believes its cash, cash equivalents, and marketable securities as of June 30, 2024 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the filing date of this Quarterly Report on Form 10-Q.

To fund its operating expenses and capital expenditure requirements after that date, the Company plans to seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

6


 

3. Summary of significant accounting policies

The complete summary of significant accounting policies included in the Company’s financial statements for the year ended December 31, 2023 can be found in “Note 3. Summary of significant accounting policies” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024.

Basis of presentation

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2023 found in the Company's Annual Report on Form 10-K filed with the SEC on February 15, 2024. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Use of estimates

The preparation of the unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the unaudited interim financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Estimates and assumptions are periodically reviewed, and the effects of the revisions are reflected in the accompanying unaudited interim financial statements in the period they are determined to be necessary. The most significant estimate relates to accrued clinical trial expenses.

Income taxes

Based upon the historical and anticipated future losses, management has determined that the deferred tax assets generated by net operating losses and research and development credits do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of June 30, 2024 and December 31, 2023.

Cash, Cash Equivalents and Restricted cash

The Company’s cash equivalents include short-term highly liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value in the accompanying balance sheets.

Restricted cash consists of a letter of credit for the benefit of the landlord in connection with the Company’s Chestnut Run Lease. See Note 8 for further details.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that total to the amounts shown in the statement of cash flows:

(in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

Cash and cash equivalents

 

$

27,828

 

 

$

25,291

 

Restricted cash

 

 

4,044

 

 

 

4,044

 

Total cash, cash equivalents, and restricted cash shown in statement of cash flows

 

$

31,872

 

 

$

29,335

 

 

7


 

Marketable Securities

The Company’s marketable securities consist of investments in corporate debt securities, United States (“U.S.”) government debt securities, and agency securities that are classified as available-for-sale. The securities are carried at fair value with the unrealized gains and losses, net of tax, included in accumulated other comprehensive loss, a component of stockholders’ equity. Realized gains and losses as well as credit losses, if any, on marketable securities are included in the Company’s statements of operations. The Company classifies marketable securities that are available for use in current operations as current assets on the balance sheets.

Revenue Recognition

In May 2024, the Company and Pathos AI, Inc. (“Pathos”) entered into a license agreement under which the Company granted to Pathos an exclusive, sublicensable, world-wide license to its selective, brain-penetrant PRMT5 inhibitor, PRT811 which is being accounted for under Accounting Standard Codification 606 – Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company's revenue recognition analysis consists of the following steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognition of revenue as we satisfy each performance obligation.

The Company evaluates all promised goods and services within a customer contract and determines which goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract.

The transaction price is determined based on the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligations when (or as) the performance obligations are satisfied. The Company recognizes a liability when the Company has received payment but has not yet satisfied the related performance obligations.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period, including pre-funded warrants to purchase shares of common stock. The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted stock awards as these instruments are considered contingently issuable shares until they vest. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise of securities, such as stock options, and the effect from unvested restricted stock awards and restricted stock units which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The Company’s unvested restricted stock awards entitle the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the unvested restricted stock awards have no obligation to fund losses.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

 

 

 

June 30,

 

 

 

2024

 

 

2023

 

Unvested restricted stock awards

 

 

 

 

 

81,044

 

Unvested restricted stock units

 

 

82,500

 

 

 

125,000

 

Stock options

 

 

15,180,727

 

 

 

12,083,788

 

 

 

15,263,227

 

 

 

12,289,832

 

Amounts in the above table reflect the common stock equivalents.

8


 

Recently Issued Accounting Pronouncements

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited interim financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Accounting guidance not yet adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU"), 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures. This ASU expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount for other segment items and a description of its composition, and interim disclosures of a reportable segment’s profit or loss and assets. The disclosures required under ASU 2023-07 are also required for public entities with a single reportable segment. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard but does not expect that it will have a material impact on the financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures related to the rate reconciliation and income taxes paid information. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard but does not expect that it will have a material impact on the financial statements and related disclosures.

4. Marketable Securities

The following provides detail of the Company's marketable securities.

(in thousands)

 

Amortized Cost

 

 

Gross unrealized gain

 

 

Gross unrealized loss

 

 

Fair Value

 

June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Agency securities

 

$

8,463

 

 

$

 

 

$

(10

)

 

$

8,453

 

Corporate debt securities

 

 

56,665

 

 

 

7

 

 

 

(141

)

 

 

56,531

 

U.S. government securities

 

 

87,178

 

 

 

 

 

 

(146

)

 

 

87,032

 

Total marketable securities

 

$

152,306

 

 

$

7

 

 

$

(297

)

 

$

152,016

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Agency securities

 

$

10,431

 

 

$

19

 

 

$

 

 

$

10,450

 

Corporate debt securities

 

 

67,806

 

 

 

193

 

 

 

(20

)

 

 

67,979

 

U.S. government securities

 

 

129,184

 

 

 

72

 

 

 

(41

)

 

 

129,215

 

Total marketable securities

 

$

207,421

 

 

$

284

 

 

$

(61

)

 

$

207,644

 

 

9


 

The Company’s marketable securities generally have contractual maturity dates of 19 months or less. As of June 30, 2024, the Company had 39 securities with a total fair market value of $144.8 million in an unrealized loss position. The Company believes any unrealized losses associated with the decline in value of its securities is temporary and is primarily related to market factors. Furthermore, the Company believes it is more likely than not that it will be able to hold its marketable securities to maturity. Therefore, the Company anticipates a full recovery of the amortized cost basis of its marketable securities at maturity and an allowance for credit losses was not recognized.

5. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The Company follows the provisions of ASC 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

10


 

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:

 

 

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)

 

June 30, 2024

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

    Money Market Funds

 

$

5,164

 

 

$

 

 

$

 

    U.S. government securities

 

 

 

 

 

21,383

 

 

 

 

Total cash equivalents

 

 

5,164

 

 

 

21,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

    Agency securities

 

 

 

 

 

8,453

 

 

 

 

    Corporate debt securities

 

 

 

 

 

56,531

 

 

 

 

    U.S. government securities

 

 

 

 

 

87,032

 

 

 

 

Total marketable securities

 

 

 

 

 

152,016

 

 

 

 

Total financial assets

 

$

5,164

 

 

$

173,399

 

 

$

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

    Money Market Funds

 

$

24,369

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

    Agency securities

 

$

 

 

$

10,450

 

 

$

 

    Corporate debt securities

 

 

 

 

 

67,979

 

 

 

 

    U.S. government securities

 

 

 

 

 

129,215

 

 

 

 

Total marketable securities

 

 

 

 

 

207,644

 

 

 

 

Total financial assets

 

$

24,369

 

 

$

207,644

 

 

$

 

 

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

(in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

Compensation and related benefits

 

$

5,639

 

 

$

9,157

 

Research and development

 

 

5,332

 

 

 

5,666

 

Other

 

 

455

 

 

 

945

 

 

$

11,426

 

 

$

15,768

 

 

11


 

7. Common Stock

The Company has two classes of common stock: “voting common stock” and “non-voting common stock.” The holders of the voting common stock are entitled to one vote for each share of voting common stock held at all meetings of stockholders. Except as otherwise required by law, the holders of non-voting common stock shall not be entitled to vote at any meetings of stockholders (or written actions in lieu of meetings) and the shares of non-voting common stock shall not be included in determining the number of shares voting or entitled to vote on any matter. Unless required by law, there shall be no cumulative voting. Any holder of non-voting common stock may elect to convert each share of non-voting common stock into one fully paid and non-assessable share of voting common stock at any time by providing written notice to the Company; provided that as a result of such conversion, such holder, together with its affiliates and any members of a Schedule 13(d) group with such holder, would not beneficially own in excess of 9.99% of the Company’s common stock immediately prior to and following such conversion, unless otherwise as expressly provided for in the Company’s restated certificate of incorporation. However, this ownership limitation may be increased (not to exceed 19.99%) or decreased to any other percentage designated by such holder of non-voting common stock upon 61 days’ notice to the Company.

Shelf Registration Statements

In November 2021, the Company filed a shelf registration statement (the "2021 Shelf Registration Statement") which permits the offering of up to $400.0 million aggregate dollar amount of shares of our common stock or preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in one or more offerings and in any combination. The 2021 Shelf Registration Statement expiries in November 2024, and as of June 30, 2024, there was $187.0 million remaining under the 2021 Shelf Registration Statement.

In May 2024, the Company filed a shelf registration statement (the "2024 Shelf Registration Statement") with the SEC for the issuance of common stock, preferred stock, debt securities, warrants, subscription rights and units up to an aggregate amount of $400 million. The 2024 Shelf Registration statement was declared effective on June 10, 2024. The 2024 Shelf Registration statement expiries in May 2027, and as of June 30, 2024, there was $400.0 million remaining under the 2024 Shelf Registration statement.

Open Market Sales Agreement

In March 2023, in connection with filing a prospectus supplement to its 2021 Shelf Registration Statement, the Company entered into an Open Market Sales Agreement (the "Sales Agreement") with Jefferies LLC, as the sales agent, pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering amount of up to $75.0 million. The $75.0 million of common stock that may be issued and sold pursuant to the Sales Agreement is included in the $400.0 million of securities that may be issued and sold pursuant to the 2021 Shelf Registration Statement. The Company will pay Jefferies LLC a commission rate of up to 3.0% of the aggregate gross proceeds from the sale of any shares of common stock pursuant to the Sales Agreement. At June 30, 2024, there was $75.0 million remaining under the Sales Agreement.

2023 Financings

During the second quarter of 2023, the Company sold 6,761,200 shares of its common stock which comprised of (i) 5,312,978 shares of its voting common stock and (ii) 1,448,222 shares of its non-voting common stock at a price of $5.75 per share and to certain investors in lieu of common stock, the Company sold pre-funded warrants to purchase 12,895,256 shares of voting common stock at a price of $5.7499 per pre-funded warrant, resulting in gross proceeds to the Company of $113.0 million. Of the voting common stock issued, 2,264,456 shares were purchased by the Company’s underwriters in connection with a 30-day option at a price of $5.75 per share. Offering costs of $2.6 million, of which $0.3 million were previously paid and deferred, were recorded to additional paid-in capital in the accompanying balance sheets, resulting in net proceeds of $110.4 million.

During the fourth quarter of 2023, the Company sold in a private placement pre-funded warrants to purchase 7,936,759 shares of voting common stock at a price of $3.1499 per pre-funded warrant, resulting in net proceeds of $24.8 million after deducting offering costs of $0.2 million.

The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. As of June 30, 2024, no pre-funded warrants had been exercised.

The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return.

The Company did not conduct any financings during the first six months of 2024.

12


 

 

8. Commitments

Leases

The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease (the “Chestnut Run Lease”). The premises include approximately 81,000 rentable square feet and has an initial term of 162 months with 3 five-year extension options and certain expansion rights. Neither the option to extend nor the expansion rights were recognized as part of the Company's measurement of the right-of-use ("ROU") asset and operating lease liability as of June 30, 2024. Under the terms of the Chestnut Run Lease, the landlord provided an allowance towards the cost of completing tenant improvements for the premises. The Company concluded that the improvements resulting from both the landlord's build-out and the tenant improvements are the landlord's assets for accounting purposes. Costs incurred by the Company related to tenant improvements in excess of the landlord's allowance were treated as prepaid rent and increased the right-of-use asset on the commencement date.

In April 2024, the Company entered into a 12 month finance lease for equipment.

Our operating lease costs for the three and six months ended June 30, 2024 were $1.0 million and $2.1 million, respectively. Our operating lease costs for the three and six months ended June 30, 2023 were $0.4 million and $0.9 million, respectively. Supplemental balance sheet and other information related to our operating and finance leases as of June 30, 2024 and December 31, 2023 were as follows:

(in thousands)