What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-12 compared with 2021-05-11 · 56 added, 55 removed, 253 unchanged (30% of the section changed)

23 unchanged sentences

487,149,741 shares authorized;

35,388,909 and 32,595,301 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

35,636,695 and 32,595,301 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Non-voting common stock, $ 0.0001 par value;

12,850,259 shares authorized;

11,402,037 and 11,110,371 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

11,402,037 and 11,110,371 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

5 unchanged sentences

STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except share and per share data)

21 unchanged sentences

Balance at March 31, 2021

Exercise of stock options

Stock-based compensation

Balance at June 30, 2021

Convertible preferred stock

8 unchanged sentences

Balance at March 31, 2020

Exercise of stock options

Stock-based compensation

Balance at June 30, 2020

See accompanying notes to unaudited interim financial statements.

1 unchanged sentence

STATEMENTS OF CASH FLOWS

Three months ended March 31,

Six months ended June 30,

(in thousands)

24 unchanged sentences

Property and equipment in accounts payable

Reclassification of offering costs paid in a prior period

Offering costs in accounts payable

Offering costs in accrued expenses and other current liabilities

See accompanying notes to unaudited interim financial statements.

11 unchanged sentences

In addition, the Company is dependent upon the services of its employees, consultants and contractors.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $128.7 million at March 31, 2021.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $ 155.6 million at June 30, 2021.

The Company has no 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 that its cash and cash equivalents as of March 31, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements into 2023.

The Company believes that its cash and cash equivalents as of June 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements into mid-2023.

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.

12 unchanged sentences

Those policies have not materially changed, except as set forth below.

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

Basis of presentation

2 unchanged sentences

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 month periods ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three and six month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

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, 2020 found in the Form 10-K filed with the SEC on March 16, 2021.

6 unchanged sentences

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 March 31, 2021 and December 31, 2020.

Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of June 30, 2021 and December 31, 2020.

Net Loss Per Share

1 unchanged sentence

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 or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock.

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and convertible preferred stock, and the effect from unvested restricted stock awards 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.

5 unchanged sentences

Unvested restricted stock awards

Unvested restricted stock units

Stock options

Amounts in the above table reflect the common stock equivalents.

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

Recently Issued Accounting Pronouncements

8 unchanged sentences

The Company adopted the new standard using the modified retrospective transition method utilizing the optional transition method and elected the package of practical expedients.

Accordingly, prior periods will not be restated to reflect the adopted standard.

Accordingly, prior periods were not restated to reflect the adopted standard.

In accordance with the guidance in ASC 842 , components of a lease should be split into three categories:

2 unchanged sentences

Upon adoption, the Company recorded a right of use asset of $ 2.5 million and corresponding operating lease liabilities of $ 2.5 million, with an offset to accrued expenses and other current liabilities of approximately $ 64,000 to eliminate deferred rent on the balance sheets.

Refer to Note 7 for the Company’s lease disclosures.

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise.

3 unchanged sentences

The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”).

For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the consolidated balance sheet.

The Company had no Short-Term Leases as of March 31, 2021.

For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the balance sheet.

The Company entered into a short-term lease in June 2021 and elected the short-term lease exemption that allows the Company to record the rent expense on a straight-line basis and does not require the recognition of a right-of-use asset or corresponding operating lease liability.

Refer to Note 7 for the Company’s lease disclosures.

After lease commencement, the Company measures its leases as follows:

2 unchanged sentences

Rent expense is recorded on a straight-line basis over the expected lease term.

The adoption of the new lease accounting standard did not have a material impact on the Company’s results of operations or cash flows for the three months ended March 31, 2021.

The adoption of the new lease accounting standard did not have a material impact on the Company’s results of operations or cash flows for the six months ended June 30, 2021.

Fair Value of Financial Instruments

2 unchanged sentences

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

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value.

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, for financial assets and liabilities measured on a recurring basis.

7 unchanged sentences

Quoted prices

March 31, 2021:

June 30, 2021:

Cash equivalents (Money Market Funds)

14 unchanged sentences

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

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

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.

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.

1 unchanged sentence

The Company has an option to renew the leases for an additional 1 -year period.

This option to extend was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of March 31, 2021 .

This option to extend was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of June 30, 2021 .

The discount rate used to account for the Company’s operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 10.0 %.

Rent expense for the three months ended March 31, 2021 and 2020 was $0.3 million and $0.2 million, respectively.

Future minimum annual lease payments under the Company’s noncancelable lease at March 31, 2021 is as follows:

In June 2021, the Company signed a 12 -month noncancelable lease, which commenced on July 1, 2021 and will expire on June 30, 2022 and has remaining lease payments of approximately $ 0.2 million in both 2021 and 2022.

Rent expense for the three months ended June 30, 2021 and 2020 was $ 0.3 million and $ 0.2 million, respectively.

Rent expense for the six months ended June 30, 2021 and 2020 was $ 0.7 million and $ 0.5 million, respectively.

Future minimum annual lease payments under the Company’s noncancelable lease at June 30, 2021 is as follows:

(in thousands)

9 unchanged sentences

The Company provides a safe harbor match with a maximum amount of 3 % of the participant’s compensation.

During the three months ended March 31, 2021, the Company made matching contributions of $0.2 million.

During the three and six months ended June 30, 2021, the Company made matching contributions of $ 0.1 million and $ 0.3 million, respectively.

Other Research and Development Arrangements

4 unchanged sentences

the 2016 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan.

New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”) and as of March 31, 2021, 6,555,615 shares were available for future grants.

New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”) and as of June 30, 2021, 6,282,783 shares were available for future grants.

The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021, and continuing for ten years , in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year.

The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors.

The Company’s stock options vest based on the terms in each award agreement, generally over four-

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

year periods with 25% of options vesting after 1 year and then monthly thereafter , and have a term of ten years .

In September 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ ESPP ” ), which , as of March 31, 2021 , had 957,056 shares of common stock reserved for future issuance.

No shares have been issued from the ESPP as of March 31 , 202 1 .

The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods with 25 % of options vesting after 1 year and then monthly thereafter, and have a term of ten years .

In September 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ESPP”), which, as of June 30, 2021, had 957,056 shares of common stock reserved for future issuance.

No shares have been issued from the ESPP as of June 30, 2021.

The Company measures stock-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.

8 unchanged sentences

Outstanding at January 1, 2021

Outstanding at March 31, 2021

Exercisable at March 31, 2021

At March 31, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $232.3 million and $50.0 million, respectively.

The following table summarizes information about stock options outstanding at March 31, 2021 under the Plan:

Outstanding at June 30, 2021

Exercisable at June 30, 2021

At June 30, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $ 131.1 million and $ 33.2 million, respectively.

The following table summarizes information about stock options outstanding at June 30, 2021 under the Plan:

Options Outstanding

6 unchanged sentences

$15.94 - $88.98

The weighted-average grant date fair value of options granted was $68.39 and $2.87 per share for the three months ended March 31, 2021 and 2020, respectively.

The aggregate intrinsic value of options exercised was $9.5 million for the three months ended March 31, 2021.

The Company recorded stock-based compensation expense of $3.7 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, related to stock options.

As of March 31, 2021, the total unrecognized compensation expense related to unvested stock option awards was $52.5 million, which the Company expects to recognize over a weighted-average period of 3.34 years.

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

The weighted-average grant date fair value of options granted was $ 38.31 and $ 2.88 per share for the six months ended June 30, 2021 and 2020, respectively.

The aggregate intrinsic value of options exercised was $ 18.3 million for the six months ended June 30, 2021.

The Company recorded stock-based compensation expense of $ 4.2 million and $ 0.6 million for the three months ended June 30, 2021 and 2020, respectively, related to stock options.

The Company recorded stock-based compensation expense of $ 7.7 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively, related to stock options.

As of June 30, 2021, the total unrecognized compensation expense related to unvested stock option awards was $ 55.6 million, which the Company expects to recognize over a weighted-average period of 3.05 years.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

Three months ended

Six months ended

Expected volatility

2 unchanged sentences

Expected dividend yield

Restricted Stock Awards

Restricted Stock Awards and Units

The Company issues restricted stock awards (“RSA”) to employees that generally vest over a four-year period with 25 % of awards vesting after one year and then monthly thereafter.

1 unchanged sentence

The fair value of an RSA is equal to the fair market value price of the Company’s common stock on the date of grant.

RSA expense is amortized straight-line over the vesting period.

RSA expense is recorded on a straight-line basis over the vesting period.

The following table summarizes activity related to RSA stock-based payment awards:

2 unchanged sentences

Unvested balance at January 1, 2021

Unvested balance at March 31, 2021

The Company recorded stock-based compensation expense of $0.2 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, related to RSAs.

As of March 31, 2021, the total unrecognized expense related to all RSAs was $2.0 million, which the Company expects to recognize over a weighted-average period of 2.49 years.

Unvested balance at June 30, 2021

The Company recorded stock-based compensation expense of $ 0.2 million and $ 0.2 million for the three months ended June 30, 2021 and 2020, respectively, related to RSAs.

The Company recorded stock-based compensation expense of $ 0.4 million and $ 0.3 million for the six months ended June 30, 2021 and 2020, respectively, related to RSAs.

As of June 30, 2021, the total unrecognized expense related to all RSAs was $ 1.8 million, which the Company expects to recognize over a weighted-average period of 2.26 years.

During the six months ended June 30, 2021, the Company granted 25,000 restricted stock units (“RSU”) to an employee that vest over a four-year period with 25 % of awards vesting after one year and then quarterly thereafter.

Any unvested units will be forfeited upon termination of services.

At June 30, 2021 the total unrecognized expense related to the RSUs was $ 0.8 million, which the Company expects to recognize over 3.95 years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements