What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-12 · 65 added, 123 removed, 145 unchanged (56% of the section changed)

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These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

We are a clinical-stage precision oncology company focused on discovering and developing small molecule therapies optimized to target the key driver mechanisms in cancers with high unmet need.

By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our target class- and technology platform-agnostic approach, we have built an efficient, fully-integrated drug discovery engine to identify compelling biological targets and create new chemical entities, or NCEs, that we rapidly advance into clinical development.

We are a clinical-stage fully integrated oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients.

We believe our approach could result in better targeted cancer therapies.

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Since our inception in 2016, we have received clearance from the U.S.

Food and Drug Administration, or the FDA, for four investigational new drug applications, or INDs, and successfully advanced these programs into clinical development.

In addition, we have three unique programs in various stages of preclinical development that we plan to advance into clinical development beginning in 2021.

Food and Drug Administration, or the FDA, for six investigational new drug applications, or INDs, and successfully advanced these programs into clinical trials.

In addition, we have two unique programs in various stages of preclinical development that we plan to advance into clinical development in 2022.

By focusing on developing agents using broad mechanisms that have multiple links to oncogenic driver pathways in select patients, we have developed a diverse pipeline consisting of six distinct programs spanning methyltransferases, kinases, protein-protein interactions and targeted protein degraders.

Our pipeline is geared towards serving patients with high unmet medical need where there are limited or no treatment options.

We are exploring therapies in both solid tumors and hematological malignancies such as adenoid cystic carcinoma, or ACC, homologous recombination deficient positive, or HRD+, cancers, myelofibrosis, or MF, and glioblastoma multiforme, or GBM, amongst others.

We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms.

Our lead product candidates are designed to be oral, potent and selective inhibitors of protein arginine methyltransferase 5, or PRMT5.

We have advanced four candidates in clinical trials and intend to file two INDs in the second half of 2022.

We have two clinical candidates that are designed to be oral, potent and selective inhibitors of protein arginine methyltransferase 5, or PRMT5.

The potency and selectivity of our product candidates is supported by preclinical data demonstrating nanomolar inhibition of PRMT5 and no inhibition of related enzymes at 1,000 times higher concentration of our product candidates.

Updated data from the dose escalation phase of the ongoing Phase 1 trial of PRT543 was presented at the AACR-NCI-EORTC Virtual International Conference on Molecular Targets and Cancer Therapeutics held October 7, 2021 through October 10, 2021.

As of an August 6, 2021 data cutoff date, the dose escalation portion of the ongoing Phase 1 trial of PRT543 enrolled a total of 49 patients across 18 unselected advanced solid tumors and lymphoma.

Patients enrolled received an average of three prior lines of therapy.

PRT543 demonstrated target engagement and inhibition of PRMT5 functional activity as evidenced by a 69% reduction in serum symmetric dimethylarginine, or sDMA, at a dose of 45 mg/5x per week.

In addition, PRT543 demonstrated signs of preliminary clinical activity, including a durable complete response, or CR, maintained for over 18 months in a patient with HRD+ ovarian cancer who remains on treatment and prolonged stable disease, or SD, persisting for over six months in five patients, including four patients with ACC and one patient with uveal melanoma.

A complete response is defined as the disappearance of all target lesions.

PRT543 was generally well tolerated:

the most common grade 3 or higher treatment-related adverse events, or AE, occurring in at least 5% of patients were thrombocytopenia (27%) and anemia (12%), both of which were reversible upon treatment interruption.

Patients were largely able to remain on therapy with few AE-related dose interruptions (27%), reductions (22%), or discontinuations (4%).

Patient enrollment is continuing in specific biomarker -selected solid tumor and hematologic malignan cy expansion cohorts.

We anticipate presenting data from the expansion cohorts of the trial at medical meetings throughout 2022.

We are also advancing PRT811, a second PRMT5 inhibitor that we have optimized for high brain exposure, in a Phase 1 clinical trial in solid tumors, including GBM .

Updated data from the dose escalation phase of the ongoing Phase 1 trial of PRT811 was presented at the AACR-NCI-EORTC Virtual International Conference on Molecular Targets and Cancer Therapeutics held October 7, 2021 through October 10, 2021.

As of an August 13, 2021 data cutoff date, the dose escalation portion of the ongoing Phase 1 trial of PRT811 enrolled a total of 45 patients, including 27 patients across 16 unselected advanced solid tumors and 18 patients with high-grade gliomas, including 17 patients with glioblastoma multiforme, or GBM.

PRT811 demonstrated dose dependent inhibition of PRMT5 activity as evidenced by an 83% reduction in serum sDMA at a dose of 600 mg daily (QD).

In addition, PRT811 demonstrated signs of preliminary clinical activity, including an IDH1 mutated GBM patient who experienced a partial response, or PR, that evolved into a durable CR for more than 13 months and remains on treatment.

In addition, a patient with splicing-mutant, or SF3B1, uveal melanoma demonstrated SD for more than six months with a 25% tumor regression and remains on treatment.

At a post data-cutoff on September 20, 2021, one additional patient (800 mg QD) with SF3B1 uveal melanoma had an unconfirmed PR and 47% decrease in target lesion, and a patient with triple negative breast cancer (800 mg QD) demonstrated a 27% decrease in target lesions.

Both patients continue treatment.

PRT811 was generally well-tolerated;

the most common grade 3 or higher treatment-related AE was thrombocytopenia (7%), which was reversible upon treatment interruption.

Patients were largely able to remain on therapy with few AE-related dose interruptions (13%), reductions (4%), or discontinuations (3%).

The study remains ongoing, and the Company expects to commence enrollment in the expansion portion of the trial in the fourth quarter of 2021.

Data from the expansion cohorts are expected to be presented at medical meetings throughout 2022.

PRT1419, our third clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1.

Our PRMT5 candidates are currently being studied in Phase 1 clinical trials in solid tumors and myeloid malignancies.

Based on data from the ongoing Phase 1 dose expansion studies of our PRMT5 candidates, we are concentrating our further development efforts on our PRT811 candidate in biomarker-selected patients in specific cancer types.

PRT811 was selected based on its superior safety profile, higher level of target engagement, and unique brain penetrant properties.

Specifically, for the PRMT5 program, we intend to:

Focus clinical development in select patient populations where clinical activity has been observed.

Complete data analysis of the ongoing expansion cohorts by mid-year to determine further development.

Report next steps for the ongoing dose expansion cohorts in the second half of 2022.

Determine appropriate development options for PRT811 based on emerging data from ongoing expansion cohorts.

PRT1419, our next clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1.

The potency and selectivity of PRT1419 is supported by preclinical data demonstrating nanomolar inhibition of MCL1 and no inhibition of related enzymes at 200 times higher concentration of our product candidate.

We have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloid leukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or MM, into the dose escalation portion of a Phase 1 open-label, multicenter clinical trial for the oral formulation of PRT1419.

We expect to add dose expansion and combination cohorts to the Phase 1 clinical trial in the second half of 2021.

Additionally, in March 2021, the FDA cleared our IND for an intravenous, or IV, formulation of PRT1419.

The Phase 1 trial of the IV formulation of PRT1419, which leverages the optimized physicochemical properties of PRT1419, is now underway in patients with solid tumors.

We recently received clearance for an IND application for our fourth clinical candidate, PRT2527.

We remain on track to initiate a clinical trial for PRT2527 by year end.

We have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloid leukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or MM, into the Phase 1 clinical trial for the oral formulation of PRT1419.

The dose escalation portion of the Phase 1 trial of both oral formulation and the IV formulation, which leverages the optimized physicochemical properties of PRT1419, are underway in patients with solid tumors and hematologic tumors.

Based on the data to date, we have prioritized development of the IV formulation of PRT1419 which demonstrated a desirable pharmacokinetic, pharmacodynamic and safety profile with potential for differentiation from competitor compounds.

We intend to evaluate combinations with PRT1419 by mid-year, with the goal of establishing safety, clinical activity and a recommended Phase 2 dose in the second half of 2022.

PRT2527 is designed to be a potent and selective Cyclin-dependent kinase 9, or CDK9, inhibitor.

In preclinical studies, PRT2527 was shown to reduce MCL1 and MYC protein levels and was highly active in preclinical models at well-tolerated doses.

PRT2527 has demonstrated high potency and kinase selectivity which may offer improved efficacy and safety compared to less selective CDK9 inhibitors.

Preclinical data demonstrated that treatment with PRT2527 depleted oncogenic drivers with short half-lives, such as MYC and MCL1, and effectively induced apoptosis.

PRT2527 treatment demonstrated robust efficacy in both hematological malignancies and solid tumor models with MYC dysregulation.

A phase one trial is underway evaluating escalating IV doses of PRT2527 as a monotherapy in patients with selected solid tumors, including sarcoma, prostate cancer, lung cancer, and other cancers with genomic alterations that lead to MYC dependence.

We anticipate completing enrollment in the Phase 1 dose escalation study of PRT2527 with the goal of identifying a recommended Phase 2 dose in the second half of 2022.

In addition to our four clinical stage candidates, we are advancing two new preclinical programs.

Our most advanced preclinical program has led to the identification of PRT3645, a brain penetrant molecule that potently and selectively targets CDK4/6.

IND-enabling studies for PRT3645 are ongoing and we intend to complete IND-enabling studies, file an IND and initiate a Phase 1 clinical trial in the second half of 2022.

Our second pre-clinical program targets Brahma homologue, or BRM, otherwise known as SMARCA2.

We have identified SMARCA2 protein degraders that appear to be potent based on preclinical data demonstrating degradation of SMARCA2 at sub-nanomolar concentrations.

Optimization of the lead compound, PRT-SCA2, is progressing, and we intend to complete IND-enabling studies and submit an IND application by year-end 2022.

We were incorporated in February 2016 under the laws of the State of Delaware.

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We have funded our operations primarily through the sale of convertible preferred stock and common stock.

Our net loss was $78.9 million for the nine months ended September 30, 2021 as compared to $37.7 million for the nine months ended September 30, 2020, and as of September 30, 2021, we had an accumulated deficit of $186.3 million.

Our net loss was $29.5 million and $21.3 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had an accumulated deficit of $248.6 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.

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Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

If we are unable to secure adequate additional

funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of September 30, 2021, we had $320.9 million in cash, cash equivalents and marketable securities.

We expect our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expenses and capital expenditures into the second half of 2023.

Departure of Chief Financial Officer, Hiring of New Chief Financial Officer

On November 5, 2021, Brian Piper, the Chief Financial Officer of Prelude Therapeutics, Incorporated (the “Company”), notified the Company that he will be resigning from the Company, effective November 19, 2021, to pursue other opportunities.

The Company has appointed Laurent Chardonnet, age 57, as Chief Financial officer, effective November 29, 2021.

Chardonnet brings to Prelude more than 25 years of biopharma financial experience.

Chardonnet served as Sr.

VP, CFO of Axcella Health and prior to Axcella, he spent 15 years at Incyte where he held roles of increasing responsibilities including VP Finance, Treasurer and Principal Accounting Officer, Head of Finance and Administration for the company’s European division, VP Alliances and Global Strategy.

Chardonnet received his Master of Business Administration from Vanderbilt University and his initial business degree from the Institut Supérieur de Gestion in Paris.

Departure of Chief Medical Officer

The Company and Dr.

David Mauro, the Company’s Chief Medical Officer, mutually agreed that Dr.

Mauro would depart from the Company to pursue other opportunities.

Mauro’s last day with the Company was on November 9, 2021.

The Company has an ongoing search for a successor.

Victor Sandor, former Chief Medical Officer of Array Biopharma and current board member and chair of the Science and Technology Committee, will provide strategic and operational oversight of clinical development during this time.

If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of March 31, 2022 , we had $ 266.2 million in cash, cash equivalents, and marketable securities.

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expense and capital expenditures into the second half of 2024.

COVID-19 Impact

We are continuing to proactively monitor and assess the current coronavirus disease 2019, or COVID-19, global pandemic.

We are continuing to proactively monitor and assess the COVID-19 pandemic.

Since early March 2020 we have been monitoring the potential impact on our business that may result from this rapidly evolving crisis and to avoid any unnecessary potential delays to our programs.

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The safety and well-being of employees, patients and partners is our highest priority.

See the Risk Factor “ The COVID-19 pandemic could adversely impact our business, including our clinical trials and clinical trial operations ” in Part II, Item 1A.

“Risk Factors” below.

Components of Results of Operations

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General and administrative expense also includes corporate facility costs not otherwise included in research and development expense, including rent, utilities, depreciation and maintenance, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased costs of operating as a public company.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities and potential commercialization efforts.

These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, legal support and accountants, among other expenses.

Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and Exchange Commission, or SEC, insurance and investor relations costs.

If any of our current or future product candidates obtains U.S.

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We anticipate re-applying for the grant from the State of Delaware from time to time as long as we maintain qualifying headcount levels in the State of Delaware.

We expect our interest income, net to increase due to our investment of cash received from our stock offerings.

Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized.

Results of Operations

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table sets forth our results of operations for the three months ended September 30, 2021 and 2020.

Comparison of the Three Months Ended March 31, 2022 and 2020

The following table sets forth our results of operations for the three months ended March 31, 2022 and 2021.

Three months ended

September 30,

(in thousands)

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Research and Development Expenses

Research and development expenses increased by $7.4 million to $22.7 million for the three months ended September 30, 2021 from $15.3 million for the three months ended September 30, 2020.

The increase was mainly due to increased clinical research costs to support the advancement of our clinical programs, as well as an increase in discovery-stage program expenses.

Research and development expenses increased by $6.4 million to $22.8 million for the three months ended March 31, 2022 from $16.5 million for the three months ended March 31, 2021.

Included in research and development expenses for the quarter ended March 31, 2022, was $3.2 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $1.8 million for the three months ended March 31, 2021.

The increase in research and development expense was primarily due to an increase in discovery-stage program expenses and from the growth and advancement of our clinical pipeline.

Our chemistry, manufacturing and other costs for the trials also increased.

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Three months ended

September 30,

(in thousands)

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General and Administrative Expenses

General and administrative expenses increased by $5.2 million to $8.1 million for the three months ended September 30, 2021 from $2.9 million for the three months ended September 30, 2020.

The increase was primarily due to an increase in personnel related expense due to an increase in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development efforts and incurred additional costs to operate as a public company.

Other Income, net

Other income, net decreased by $1.2 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the third quarter of 2020.

We did not receive any research and development tax credits in the third quarter of 2021.

Results of Operations

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table sets forth our results of operations for the nine months ended September 30, 2021 and 2020.

Nine months ended

September 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income, net

Research and Development Expenses

Research and development expenses increased by $28.0 million to $61.6 million for the nine months ended September 30, 2021 from $33.6 million for the nine months ended September 30, 2020.

The increase was mainly due to increased clinical research costs to support the advancement of our clinical programs, as well as an increase in discovery-stage program expenses.

Our chemistry, manufacturing and other costs for the trials also increased.

We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities.

However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

Research and development expenses by program are summarized in the table below:

Nine months ended

September 30,

(in thousands)

PRT1419 (Oral and IV)

Discovery programs

Internal costs, including personnel related

General and Administrative Expenses

General and administrative expenses increased by $13.4 million to $19.1 million for the nine months ended September 30, 2021 from $5.7 million for the nine months ended September 30, 2020.

The increase was primarily due to an increase in personnel related expense due to increases in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development efforts and incurred additional costs to operate as a public company.

General and administrative expenses increased by $2.0 million to $7.5 million for the three months ended March 31, 2022 from $5.5 million for the three months ended March 31, 2021.

Included in the general and administrative expenses for the quarter ended March 31, 2022, was $3.6 million of non-cash expense related to stock-based compensation expense, including employee stock options, as compared to $2.0 million for the same period in 2021.

The increase in general and administrative expense was primarily due to an increase in non-cash stock-based compensation expense along with professional fees as we expanded our operations to support our research and development efforts.

Other Income, net

Other income, net increased by $0.2 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the first and second quarter of 2021.

Other income, net increased by $0.2 million to $0.8 million for the three months ended March 31, 2022 from $0.7 million for the three months ended March 31, 2021, primarily due to the receipt and recognition of research and development tax credits from the State of Delaware during 2022, as well as interest earned on the investment of our cash proceeds.

Liquidity and Capital Resources

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Since our inception, we have funded our operations through the sale of convertible preferred stock and common stock .

As of September 30, 2021, we had $320.9 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $186.3 million.

As of March 31, 2022, we had $266.2 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $248.6 million.

We expect our existing cash, cash equivalents and marketable securities to enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024 .

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The following table shows a summary of our cash flows for the periods indicated:

Nine months ended

September 30,

Three months ended

(in thousands)

Cash used in operating activities

Cash used in investing activities

Cash provided by (used in) investing activities

Cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Operating Activities

During the nine months ended September 30, 2021, we used $57.8 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $78.9 million, offset by a $4.0 million net decrease in our operating assets and liabilities and noncash charges of $17.1 million, which consisted of $15.2 million in stock-based compensation, $0.6 million in depreciation, $0.9 million noncash lease expense, and $0.4 million in amortization of premiums and discounts on marketable securities.

During the three months ended March 31, 2022, we used $21.9 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $29.5 million and a $0.7 million net increase in our operating assets and liabilities, offset by noncash charges of $8.3 million, which consisted of $6.8 million in stock-based compensation, $0.7 million in amortization of premiums and discounts on marketable securities, $0.4 million noncash lease expense, and $0.3 million in depreciation.

The primary use of cash was to fund our operations related to the development of our product candidates.

During the nine months ended September 30, 2020, we used $31.3 million of cash in operating activities.

During the three months ended March 31, 2021, we used $16.1 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $21.3 million, offset by a $0.8 million net decrease in our operating assets and liabilities and noncash charges of $4.3 million, which consisted of $0.2 million in depreciation and $3.9 million in stock-based compensation.

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Investing Activities

During the nine months ended September 30, 2021, we used $260.0 million of cash to purchase marketable securities and $2.0 million of cash for the purchase of property and equipment.

During the nine months ended September 30, 2020, we used $0.3 million of cash for the purchase of property and equipment.

During the three months ended March 31, 2022, net cash provided by investing activities consisted primarily of $42.5 million in proceeds from maturities of marketable securities.

During the three months ended March 31, 2021 we used $1.0 million of cash for the purchase of property and equipment.

Financing Activities

During the nine months ended September 30, 2021, financing activities provided $162.9 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $1.5 million from the exercise of stock options.

During the nine months ended September 30, 2020, financing activities provided $247.5 million of cash.

During the nine months ended September 30, 2020, we completed our IPO and received net cash of $167.9 million.

We also received $49.8 million from the sale of our Series C convertible preferred stock, $29.9 million from the sale of our Series B convertible preferred stock and $96,000 from the exercise of stock options.

During the nine months ended September 30, 2020, we made $0.3 million in payments for our capital lease obligation.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

We do not engage in off-balance sheet financing arrangements.

In addition, we do not engage in trading activities involving non-exchange traded contracts.

We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

During the three months ended March 31, 2022, financing activities provided $0.2 million from the exercise of stock options.

During the three months ended March 31, 2021, financing activities provided $161.8 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $0.4 million from the exercise of stock options.

Critical Accounting Policies

During the three months ended September 30, 2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” on our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2021.

During the three months ended March 31, 2022, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2022.

JOBS Act Accounting Election

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As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act, including without limitation, exemption to the requirements for providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our IPO, (ii) in which we have total annual gross revenues of at least $1.07 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Subject to certain conditions, as an emerging growth company, we may rely on certain other exemptions and reduced reporting requirements, including without limitation, exemption to the requirements for providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year.

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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 2. Management’s Discussion and Analysis