What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 74 added, 54 removed, 326 unchanged (28% of the section changed)

18 unchanged sentences

Other liabilities

Operating lease liability

Total liabilities

3 unchanged sentences

487,149,741 shares authorized;

36,293,331 and 36,200,299 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

36,369,248 and 36,200,299 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Non-voting common stock, $ 0.0001 par value;

12,850,259 shares authorized;

11,402,037 and 11,402,037 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

11,402,037 and 11,402,037 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except share and per share data)

9 unchanged sentences

Comprehensive loss

Unrealized loss on marketable securities, net of tax

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

Comprehensive loss

11 unchanged sentences

Balance at January 1, 2022

Exercise of stock options

Unrealized loss on marketable securities

Stock-based compensation

Issuance of common stock upon exercise of stock options

Unrealized gain (loss) on marketable securities

Stock-based compensation expense

Balance at March 31, 2022

Issuance of common stock upon exercise of stock options

Issuance of common stock under ESPP

Unrealized gain (loss) on marketable securities

Stock-based compensation expense, net of forfeitures of restricted stock awards

Balance at June 30, 2022

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Stockholders’ equity (deficit)

3 unchanged sentences

Balance at January 1, 2021

Exercise of stock options

Issuance of common stock upon exercise of stock options

Sale of common stock,

net of offering costs of $ 739

Stock-based compensation

Stock-based compensation expense

Balance at March 31, 2021

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at June 30, 2021

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)

12 unchanged sentences

Cash flows provided by (used in) investing activities:

Purchases of marketable securities

Proceeds from maturities of marketable securities

3 unchanged sentences

Proceeds from the sale of common stock, net of offering costs

Proceeds from the exercise of stock options

Proceeds from the issuance of common stock under ESPP

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

Net cash provided by financing activities

19 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 $ 248.6 million at March 31, 2022.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $ 276.0 million at June 30, 2022.

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, cash equivalents, and marketable securities as of March 31, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2024.

The Company believes that its cash, cash equivalents, and marketable securities as of June 30, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2024.

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.

3 unchanged sentences

On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic.

There is significant uncertainty as to the likely effects of this disease and emerging variants which may, among other things, materially impact the Company’s planned clinical trials.

There continues to be significant uncertainty as to the effects of this disease and emerging variants which may, among other things, materially impact the Company’s planned clinical trials.

This pandemic or outbreak could result in difficulty securing clinical trial site locations, CROs, and/or trial monitors and other critical vendors and consultants supporting the trial.

In addition, outbreaks or the perception of an outbreak near a clinical trial site location could impact the Company’s ability to enroll patients.

These situations, or others associated with COVID-19, could cause delays in the Company’s clinical trial plans and could increase expected costs, all of which could have a material adverse effect on the Company’s business and its financial condition.

These situations, or others associated with the ongoing COVID-19 pandemic, could cause delays in the Company’s clinical trial plans and could increase expected costs, all of which could have a material adverse effect on the Company’s business and its financial condition.

At the current time, the Company is unable to quantify the potential effects of this pandemic on its future financial statements.

7 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 months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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, 2021 found in the Form 10-K filed with the SEC on March 17, 2022.

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, 2022 and December 31, 2021.

Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of June 30, 2022 and December 31, 2021.

Cash, Cash Equivalents and Restricted cash

11 unchanged sentences

Realized gains and losses as well as credit losses, if

any, on marketable securities are included in the Company's statements of operations.

any, on marketable securities are included in th e 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 .

10 unchanged sentences

Stock options

Employee stock purchase plan

Amounts in the above table reflect the common stock equivalents.

23 unchanged sentences

The amendments require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy (i) the type of transaction (ii) the accounting for the transaction, and (iii) the effect of the transaction on the entity’s financial statements.

The Company adopted this

standard as of January 1, 2022 using a prospe ctive approach and i t did no t have a material impact on the Company’s financial statements and related disclosures.

The Company adopted this standard as of January 1, 2022 using a prospective approach and it did not have a material impact on the Company’s financial statements and related disclosures.

Marketable Securities

4 unchanged sentences

Gross unrealized loss

March 31, 2022

June 30, 2022:

Corporate debt securities

20 unchanged sentences

Quoted prices

March 31, 2022:

June 30, 2022:

Cash equivalents (Money Market Funds)

24 unchanged sentences

During the first quarter of 2022, the Lease was amended to allow the Company the option to renew the Lease for two 6 -month periods and the Company exercised its option to renew the lease for an additional 6 months until June 30, 2023.

The second option to extend the Lease for an additional 6 months was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of March 31, 2022 .

The discount rate used to account for the Company’s operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 6.0 %.

Rent expense for the three months ended March 31, 2022 and 2021 was $ 0.5 million and $ 0.3 million, respectively.

Future minimum annual lease payments under the L ease at March 31, 2022 is as follows:

Rent expense for the three months ended June 30, 2022 and 2021 was $ 0.6 million and $ 0.3 million, respectively.

Rent expense for the six months ended June 30, 2022 and 2021 was $ 1.1 million and $ 0.7 million, respectively.

Future minimum annual lease payments under the L ease at June 30, 2022 are as follows:

(in thousands)

3 unchanged sentences

Current and noncurrent lease liability

During the fourth quarter of 2021, the Company entered into a lease agreement (the “Chestnut Run Lease”) with a commencement date of the earlier of (i) the Landlord Work Substantial Completion Date (as such term is defined in the Chestnut Run Lease), or (ii) the date the Company takes possession of the premises for the conduct of the Company’s business (the “Commencement Date”).

The Chestnut Run Lease premises includes approximately 81,000 square feet, located at Chestnut Run Plaza in Wilmington, Delaware (the Premises).

The Premises contains both office and lab space the Company intends to use for administrative, research and development and other activities.

In August 2022, we entered into an amendment (the “Lease Amendment”) to the lease agreement for office and lab space at Chestnut Run Plaza in Wilmington, Delaware (the “Chestnut Run Lease”).

T he Chestnut Run Lease has a commencement date of the earlier of (i) the Landlord Work Substantial Completion Date (as such term is defined in the Chestnut Run Lease), or (ii) the date the Company takes possession of the premises for the conduct of the Company’s business (the “Commencement Date”).

The Chestnut Run Lease premises includes approximately 81,000 rentable square feet, located at Chestnut Run Plaza in Wilmington, Delaware (the Premises).

Upon the Commencement Date, the Company will recognize a right-of-use asset and operating lease liability in accordance with ASC 842.

The Chestnut Run Lease has an initial term of 162 months with 3 five-year extension options and certain expansion rights.

The aggregate estimated rent payments due over the initial term of the Chestnut Run Lease is approximately $ 33.8 million.

The estimated rent payments due for the remainder of 2022 along with each of the next five years and thereafter is as follows:

The Lease Amendment increases the monthly base rent payments due over the initial term of the Chestnut Run Lease to approximately $ 42.6 million.

The estimated rent payments related to the Chestnut Run Lease are as follows:

(in thousands)

2022 (remaining 6 months)

The Company paid a security deposit for the Chestnut Run Lease in the form of a letter of credit of $ 4.0 million, which is included in the balance sheet as restricted cash as of March 31, 2022.

The Company paid a security deposit for the Chestnut Run Lease in the form of a letter of credit of $ 4.0 million, which is included in the balance sheet as restricted cash as of June 30, 2022.

The security deposit may be reduced to $ 0.5 million over time in accordance with the terms of the Chestnut Run Lease.

14 unchanged sentences

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

For both the three months ended March 31, 2022 and 2021, the Company made matching contributions of $ 0.2 million.

For both the three months ended June 30, 2022 and 2021, the Company made matching contributions of $ 0.1 million.

For both the six months ended June 30, 2022 and 2021, the Company made matching contributions of $ 0.3 million.

Research Collaboration Agreement

11 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, 2022, 6,240,398 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, 2022, 5,708,289 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.

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

Outstanding at January 1, 2022

Outstanding at March 31, 2022

Exercisable at March 31, 2022

At March 31, 2022, the aggregate intrinsic value of outstanding options and exercisable options was $ 11.3 million and $ 6.7 million, respectively.

The following table summarizes information about stock options outstanding at March 31, 2022 under the Plan:

Outstanding at June 30, 2022

Exercisable at June 30, 2022

At June 30, 2022, the aggregate intrinsic value of outstanding options and exercisable options was $ 7.7 million and $ 4.9 million, respectively.

The following table summarizes information about stock options outstanding at June 30, 2022 under the Plan:

Options Outstanding

8 unchanged sentences

$13.05 - $88.98

The weighted-average grant date fair value of options granted was $ 7.62 and $ 68.39 per share for the three months ended March 31, 2022 and 2021, respectively.

The aggregate intrinsic value of options exercised was $ 0.6 million for the three months ended March 31, 2022.

The Company recorded stock-based compensation expense of $ 6.5 million and $ 3.7 million for the three months ended March 31, 2022 and 2021, respectively, related to stock options.

As of March 31, 2022, the total unrecognized compensation expense related to unvested stock option awards was $ 72.2 million, which the Company expects to recognize over a weighted-average period of 3.01 years.

The weighted-average grant date fair value of options granted was $ 6.00 and $ 38.31 per share for the six months ended June 30, 2022 and 2021, respectively.

The aggregate intrinsic value of options exercised was $ 0.7 million for the six months ended June 30, 2022.

The Company recorded stock-based compensation expense of $ 5.7 million and $ 4.2 million for the three months ended June 30, 2022 and 2021, respectively, related to stock options.

The Company recorded stock-based compensation expense of $ 12.2 million and $ 7.7 million for the six months ended June 30, 2022 and 2021, respectively, related to stock options.

As of June 30, 2022, the total unrecognized compensation expense related to unvested stock option awards was $ 61.8 million, which the Company expects to recognize over a weighted-average period of 2.79 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

11 unchanged sentences

Unvested balance at January 1, 2022

Unvested balance at March 31, 2022

The Company recorded stock-based compensation expense of $ 0.2 million for both the three months ended March 31, 2022 and 2021 related to RSAs.

As of March 31, 2022, the total unrecognized expense related to all RSAs was $ 1.1 million, which the Company expects to recognize over a weighted-average period of 1.63 years.

In 2021, the Company granted restricted stock units (“RSU”) to employees that generally vest over a four-year period with 25 % of awards vesting after one year and then quarterly thereafter.

Unvested balance at June 30, 2022

The Company recorded stock-based compensation expense of $ 0.2 million for both the three months ended June 30, 2022 and 2021 related to RSAs.

The Company recorded stock-based compensation expense of $ 0.4 million for both the six months ended June 30, 2022 and 2021, related to RSAs.

As of June 30, 2022, the total unrecognized expense related to all RSAs was $ 0.9 million, which the Company expects to recognize over a weighted-average period of 1.45 years.

The Company granted restricted stock units (“RSU”) to employees that generally 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 March 31, 2022 there were 20,000 RSUs outstanding which had a weighted-average grant date fair value of $ 18.32 .

There were no RSUs granted or forfeited during the three months ended March 31, 2022.

The Company recorded stock-based compensation expense of $ 24 thousand for the three months ended March 31, 2022 related to RSUs.

At March 31, 2022 the total unrecognized expense related to the RSUs was $ 0.3 million, which the Company expects to recognize over 3.51 years.

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

Weighted-average

grant date fair

Unvested balance at January 1, 2022

Unvested balance at June 30, 2022

The Company recorded stock-based compensation expense of $ 58 thousand and $ 82 thousand for the three and six months ended June 30, 2022, respectively, related to RSUs.

At June 30, 2022 the total unrecognized expense related to the RSUs was $ 1.0 million, which the Company expects to recognize over 3.61 years.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of March 31, 2022, had 1,407,365 shares of common stock reserved for future issuance.

The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of June 30, 2022, had 1,339,285 shares of common stock reserved for future issuance.

The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year and continuing for ten years beginning in 2021, in an amount equal to one percent of the total number of shares of all classes 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.

6 unchanged sentences

Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period.

The Company recognized share-based compensation expense of $ 0.1 million and nil for the three months ended March 31, 2022 and 2021, respectively, related to the ESPP.

The Company recognized share-based compensation expense of $ 0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively, related to the ESPP.

There was no share-based compensation expense recognized in 2021 related to the ESPP.

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