Prelude Therapeutics Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 15, 2024, or our 2023 Annual Report on Form 10-K. These forward-looking statements may include, but are not limited to, statements regarding our future results of operations and financial position, inflation and interest rate risk, a potential recession, a potential temporary federal government shutdown, business strategy, market size, potential growth opportunities, preclinical and clinical development activities, efficacy and safety profile of our product candidates, use of net proceeds from our offerings, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of preclinical studies and clinical trials, commercial collaborations with third parties and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “continue,” “will,” “schedule,” and “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 15, 2024, or our 2023 Annual Report on Form 10-K. These forward-looking statements may include, but are not limited to, statements regarding our future results of operations and financial position, our ability to develop our clinical candidates, inflation and interest rate risk, a potential recession, a potential temporary federal government shutdown, business strategy, market size, potential growth opportunities, preclinical and clinical development activities, efficacy and safety profile of our product candidates, use of net proceeds from our offerings, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of preclinical studies and clinical trials, commercial collaborations with third parties and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “continue,” “will,” “schedule,” and “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Previous wording

We have several drug candidates in clinical development and our objective is to generate proof-of-concept clinical data to guide our future regulatory pathways to approval. Our SMARCA2 molecule is a unique, first-in-class protein degrader, targeting specific patient populations. Our CDK9 inhibitor is selective and potent, with a potentially superior safety profile over first-generation CDK9 inhibitors. Our next generation CDK4/6 inhibitor is specifically designed to be brain and tissue penetrant.

Current wording

We have several drug candidates in clinical development and our objective is to generate proof-of-concept clinical data to guide our future regulatory pathways to approval. Our SMARCA2 molecule is a unique, first-in-class protein degrader, targeting specific patient populations. Our CDK9 inhibitor is selective and potent, with a potentially superior safety profile over first-generation CDK9 inhibitors.

Previous wording

Patients with SMARCA4 mutations or deletions have a poor prognosis and as a result, this is an area of high unmet medical need. Therefore, mutated or deleted SMARCA4 cancers provide a potential biomarker to select those patients most likely to respond to treatment with a highly selective SMARCA2 degrader.

Current wording

Patients with SMARCA4 mutated cancer have a poor prognosis. This represents an area of high unmet medical need. Therefore, mutated or deleted SMARCA4 cancers provide a potential biomarker to select those patients most likely to respond to treatment with a highly selective SMARCA2 degrader.

Previous wording

PRT3789 is currently in Phase 1 clinical development in biomarker selected SMARCA4 mutant patients. To date, PRT3789 has demonstrated selective, potent and dose dependent degradation of SMARCA2 with an acceptable safety profile. Based on PK/PD and safety data to date, we expect to conclude monotherapy dose escalation in 2024 and identify a recommended Phase 2 dose. In addition, enrollment of patients into back-fill cohorts enriched for NSCLC and SMARCA4 loss-of-function mutations is ongoing, as is enrollment of combination with the docetaxel cohort. Objectives for this first Phase 1 clinical trial are to establish the safety and tolerability profile of PRT3789 as both monotherapy and in combination with docetaxel, evaluate activity, pharmacokinetics and pharmacodynamics and determine a dose and potential indications for advancement into a registrational clinical trial. We expect to present interim Phase 1 data at the European Society of Medical Oncology (ESMO) Congress 2024 on September 13, 2024 from patients currently enrolled in the Phase 1 trial.

Current wording

Enrollment remains on track, and the Company expects to conclude monotherapy dose escalation by year end 2024 and identify a dose for advancement to registrational trials. In addition, enrollment of patients into back-fill cohorts enriched for NSCLC and SMARCA4 loss-of-function mutations is ongoing, as is enrollment of the combination with docetaxel cohort.

Previous wording

Our discovery team has identified a series of highly selective and orally bioavailable SMARCA2 degraders. In July 2024, we received IND clearance for the lead oral molecule, PRT7732, which we believe is on track to enter Phase 1 clinical development in the second half of 2024.

Current wording

Our discovery team has identified a series of highly selective and orally bioavailable SMARCA2 degraders. In July 2024, we received IND clearance for the lead oral molecule, PRT7732. The Company initiated and enrolled our first patients in a phase 1 multi-dose escalation trial of PRT7732 (NCT06560645) in biomarker selected SMARCA4 mutated cancers.

Previous wording

The observed dose-dependent downregulation of MYC and MCL1 mRNA expression, CDK9 transcriptional targets, was consistent with the degree of target engagement required for preclinical efficacy. As predicted by the preclinical models, 12 mg/m2 QW dosing showed optimal target inhibition and has been selected as the optimal dose. The overall safety profile observed in this study supports further development of PRT2527 in hematologic malignancies (NCT05665530). In this study, PRT2527 is advancing as monotherapy in hematological indications, such as B-cell malignancies and acute myeloid leukemia (AML), and we have initiated the combination with zanubrutinib in B-cell malignancies. We expect to complete the monotherapy dose escalation in B-cell malignancies in 2024. Initiation of a second cohort of patients with AML occurred in the first half of 2024. Interim Phase 1 data is on track for presentation in the fourth quarter of 2024.

Current wording

The observed dose-dependent downregulation of MYC and MCL1 mRNA expression, CDK9 transcriptional targets, was consistent with the degree of target engagement required for preclinical efficacy. As predicted by the preclinical models, 12 mg/m2 QW dosing showed optimal target inhibition and has been selected as the optimal dose. The overall safety profile observed in this study supports further development of PRT2527 in hematologic malignancies (NCT05665530). In this study, PRT2527 is advancing as monotherapy in both lymphoid and myeloid hematological malignancies and we have initiated the combination with zanubrutinib in B-cell malignancies. We expect to complete the monotherapy dose escalation in B-cell malignancies in 2024. Initiation of dose escalation in myeloid malignancies occurred in the first half of 2024. Interim phase 1 clinical data with potentially best-in-class CDK9 inhibitor, PRT2527 in hematological malignancies will be presented at the American Society of Hematology Annual Meeting in December 2024.

Previous wording

PRT3645 is a brain and tissue penetrant molecule that potently targets CDK4/6 with a biased selectivity for CDK4. A Phase 1 multi-dose escalation clinical trial of PRT3645 has been completed. At the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics, we presented data, showing that treatment with PRT3645 was associated with a substantial decrease in pRb and Ki67 expression, indicating a high level of target engagement at the doses evaluated. Also, PRT3645 was generally well tolerated in the initial three dose cohorts of patients with no clinically meaningful gastrointestinal, hematologic or neurological events reported to date, leveraging its enhanced selectivity profile. Having completed the dose escalation portion of the Phase 1 clinical trial of PRT3645, we intend to explore continued clinical development with external partners.

Current wording

PRT3645 is a brain and tissue penetrant molecule that potently targets CDK4/6 with a biased selectivity for CDK4. A Phase 1 multi-dose escalation clinical trial of PRT3645 has been completed. At the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics, we presented data, showing that treatment with PRT3645 was associated with a substantial decrease in pRb and Ki67 expression, indicating a high level of target engagement at the doses evaluated. Also, PRT3645 was generally well tolerated in the initial three dose cohorts of patients with no clinically meaningful gastrointestinal, hematologic or neurological events reported to date, leveraging its enhanced selectivity profile. Having completed the dose escalation portion of the Phase 1 clinical trial of PRT3645, we intend to continue to explore continued clinical development with external partners.

Previous wording

Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations. We have funded our operations primarily through the sale of convertible preferred stock, common stock and pre-funded warrants. Our net loss was $66.2 million and $58.1 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $522.6 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

Current wording

Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations. We have funded our operations primarily through the sale of convertible preferred stock, common stock and pre-funded warrants. Our net loss was $98.4 million and $88.8 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $554.8 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

Previous wording

To-date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. We expect to recognize revenue from our license agreement as we satisfy remaining performance obligations. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

Current wording

To-date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

Previous wording

Research and development expenses increased from $25.0 million for the three months ended June 30, 2023 to $29.5 million for the three months ended June 30, 2024. Research and development expenses increased primarily due to an increase in our chemistry, manufacturing, and controls ("CMC") expense to support our pre-clinical and clinical research programs. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities.

Current wording

Research and development expenses increased from $26.3 million for the three months ended September 30, 2023 to $29.5 million for the three months ended September 30, 2024. Included in research and development expense for the three months ended September 30, 2024 was $3.4 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $3.3 million for three months ended September 30, 2023. Research and development expenses increased primarily due to an increase in our chemistry, manufacturing, and controls ("CMC") costs supporting our pre-clinical and clinical programs. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities.

Previous wording

General and administrative expenses increased from $7.4 million for the three months ended June 30, 2023 to $7.7 million for the three months ended June 30, 2024. General and administrative expenses increased primarily due to an increase in professional fees incurred as we expand our operations to support our research and development efforts.

Current wording

General and administrative expenses increased from $7.1 million for the three months ended September 30, 2023 to $7.9 million for the three months ended September 30, 2024. Included in general and administrative expenses for the three months ended September 30, 2024, was $2.5 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $3.4 million for three months ended September 30, 2023. General and administrative expenses increased primarily due to an increase in professional fees incurred to support our research and development efforts.

Previous wording

Other income, net increased from $2.0 million for the three months ended June 30, 2023, to $2.4 million for the three months ended June 30, 2024 primarily due to interest earned on the investment of our cash balance as a result of higher interest rates and higher investment balances.

Current wording

Other income, net decreased from $2.8 million for the three months ended September 30, 2023, to $2.1 million for the three months ended September 30, 2024 primarily due to lower interest earned on the investment of our cash balance as a result of lower investment balances.

Previous wording

Research and development expenses increased from $46.8 million for the six months ended June 30, 2023 to $56.9 million for the six months ended June 30, 2024. Research and development expenses increased primarily due to the timing of our clinical research programs as well as an increase in our CMC expense to support our pre-clinical and clinical research programs. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities.

Current wording

Research and development expenses increased from $73.1 million for the nine months ended September 30, 2023 to $86.4 million for the nine months ended September 30, 2024. Research and development expenses increased primarily due to the timing of our clinical research programs as well as an increase in our CMC expense to support our pre-clinical and clinical programs. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities.

Previous wording

As of June 30, 2024, we had $179.8 million in cash, cash equivalents, and marketable securities. We believe that our cash, cash equivalents, and marketable securities as of June 30, 2024 will be sufficient to fund operating expenses and capital expenditure requirements into 2026. Since our inception, we have funded our operations through the sale of convertible preferred stock, common stock, and pre-funded warrants.

Current wording

As of September 30, 2024, we had $153.6 million in cash, cash equivalents, and marketable securities. We believe that our cash, cash equivalents, and marketable securities as of September 30, 2024 will be sufficient to fund operating expenses and capital expenditure requirements into 2026. Since our inception, we have funded our operations through the sale of convertible preferred stock, common stock, and pre-funded warrants.

Previous wording

We did not issue any securities during the first or second quarter of 2024.

Current wording

We did not issue any securities during the nine months ended September 30, 2024.

Previous wording

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.

Current wording

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 expires in May 2027, and as of September 30, 2024 there was $400.0 million remaining under the 2024 Shelf Registration Statement.

Previous wording

In March 2023, we filed a prospectus supplement to our existing shelf registration statement on Form S-3 (the "2021 Shelf Registration Statement"). The 2021 Shelf Registration Statement 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 expires in November 2024, and as of June 30, 2024 there was $187.0 million remaining under the 2021 Shelf Registration Statement. In March 2023, in connection with filing a prospectus supplement to our 2021 Shelf Registration Statement, we entered into an Open Market Sales Agreement (the "Sales Agreement") with Jefferies LLC, as the sales agent, pursuant to which we may offer and sell shares of our 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. We 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. We have $75.0 million remaining under the Sales Agreement as of June 30, 2024.

Current wording

In March 2023, we filed a prospectus supplement to our existing shelf registration statement on Form S-3 (the "2021 Shelf Registration Statement"). The 2021 Shelf Registration Statement 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 expires on November 24, 2024, and as of September 30, 2024 there was $187.0 million remaining under the 2021 Shelf Registration Statement. In March 2023, in connection with filing a prospectus supplement to our 2021 Shelf Registration Statement, we entered into an Open Market Sales Agreement (the "Sales Agreement") with Jefferies LLC, as the sales agent, pursuant to which we may offer and sell shares of our 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. We 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. We have $75.0 million remaining under the Sales Agreement as of September 30, 2024. Upon the expiry of the 2021 Shelf Registration Statement, we expect to file a prospectus supplement to the 2024 Shelf Registration Statement in order to continue to allow us to access the Sales Agreement.

Previous wording

During the six months ended June 30, 2024, we used $54.8 million of cash in operating activities. Cash used in operating activities reflected our net loss of $66.2 million offset by noncash charges of $10.5 million, which primarily consisted of stock-based compensation, and $0.9 million net decrease in our operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates.

Current wording

During the nine months ended September 30, 2024, we used $82.1 million of cash in operating activities. Cash used in operating activities reflected our net loss of $98.4 million offset by noncash charges of $16.4 million, which primarily consisted of stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

Previous wording

During the six months ended June 30, 2023, we used $57.8 million of cash in operating activities. Cash used in operating activities reflected our net loss of $58.1 million and a $13.3 million net increase in our operating assets and liabilities, offset by noncash charges of $13.6 million, which primarily consisted of $13.0 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

Current wording

During the nine months ended September 30, 2023, we used $83.5 million of cash in operating activities. Cash used in operating activities reflected our net loss of $88.8 million and a $14.2 million net increase in our operating assets and liabilities, offset by noncash charges of $19.5 million, which primarily consisted of $19.7 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

Previous wording

During the six months ended June 30, 2024, net cash provided by investing activities of $57.3 million consisted primarily of $71.4 million in proceeds from maturities of marketable securities, partially offset by $13.4 million in purchases of marketable securities. During the six months ended June 30, 2023, net cash used in investing activities of $57.4 million consisted primarily of $128.1 million in purchases of marketable securities, partially offset by $72.5 million in proceeds from maturities of marketable securities.

Current wording

During the nine months ended September 30, 2024, net cash provided by investing activities of $68.1 million consisted primarily of $114.2 million in proceeds from maturities of marketable securities, partially offset by $45.4 million in purchases of marketable securities. During the nine months ended September 30, 2023, net cash used in investing activities of $42.4 million consisted primarily of $162.2 million in purchases of marketable securities, partially offset by $122.3 million in proceeds from maturities of marketable securities.

Previous wording

For the six months ended June 30, 2024 net cash provided by financing activities was primarily from proceeds received from the issuance of common stock under the employee stock purchase plan, offset by principal payments on our finance lease and the payment of offering costs related to the shelf registration statement. For the six months ended June 30, 2023, net cash provided by financing activities was $111.1 million which was primarily the result of $110.7 million in proceeds received from the sale of common stock and pre-funded warrants, net of issuance costs.

Current wording

For the nine months ended September 30, 2024 net cash used in financing activities was primarily for principal payments on our finance lease and the payment of offering costs related to the shelf registration statement, partially offset by proceeds received from the issuance of common stock under the employee stock purchase plan. For the nine months ended September 30, 2023, net cash provided by financing activities was $111.2 million which was primarily the result of $110.8 million in proceeds received from the sale of common stock and pre-funded warrants, net of issuance costs.

Previous wording

In May 2024, the Company and Pathos AI, Inc. (“Pathos”) entered into a license agreement under which we granted to Pathos an exclusive, sublicensable, world-wide license to our selective, brain-penetrant PRMT5 inhibitor, PRT811, which is being accounted for under Accounting Standard Codification 606 –Revenue from Contracts with Customers. Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Our 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.

Current wording

The Company recognizes revenue under Accounting Standard Codification 606 –Revenue from Contracts with Customers. Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Our 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.