[10-Q] Prelude Therapeutics Inc Quarterly Earnings Report
Prelude Therapeutics (PRLD) filed its Q3 2025 10‑Q, reporting revenue of $6.5 million from an amended AbCellera collaboration, total operating expenses of $26.9 million, and a net loss of $19.7 million ($0.26 per share). Cash, cash equivalents, restricted cash and marketable securities were $58.2 million as of September 30, 2025.
Subsequent to quarter‑end, the company received $6 million from an expanded AbCellera agreement and $60 million in capital from Incyte (an initial $35 million in cash plus a $25 million equity investment at $4.00 per share for 6,250,000 non‑voting shares). As of November 10, 2025, 62,865,270 voting and non‑voting common shares were outstanding. Based on preliminary estimates, these funds and existing balances could extend cash runway into 2027; however, the company states that substantial doubt exists about its ability to continue as a going concern.
Management announced a pause of the SMARCA2 degrader program, an ~11% workforce reduction with $0.5 million in one‑time costs, and noted regained compliance with Nasdaq’s $1.00 minimum bid price requirement. Year‑to‑date operating cash use was $79.4 million, partially offset by $113.8 million provided by investing activities from marketable securities maturities.
- $60M capital from Incyte post‑quarter (cash plus equity investment) strengthens near‑term liquidity.
- Going concern warning: company states substantial doubt about its ability to continue as a going concern.
Insights
Cash bolstered by Incyte, but going concern raises risk.
Prelude Therapeutics posted Q3 revenue of
The company disclosed that, despite preliminary runway into
Key items to track in subsequent filings include progress under the Incyte option agreement and updates on AbCellera DAC workstreams. Actual impact will depend on execution against stated milestones and any additional financing plans.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 10, 2025, the registrant had
Table of Contents
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Page |
PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
1 |
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Balance Sheets (Unaudited) |
1 |
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Statements of Operations and Comprehensive Loss (Unaudited) |
2 |
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Statements of Changes in Stockholders’ Equity (Unaudited) |
3 |
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Statements of Cash Flows (Unaudited) |
5 |
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Notes to Unaudited Interim Financial Statements |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
27 |
Item 4. |
Controls and Procedures |
28 |
PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
29 |
Item 1A. |
Risk Factors |
29 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
29 |
Item 3. |
Defaults Upon Senior Securities |
29 |
Item 4. |
Mine Safety Disclosures |
29 |
Item 5. |
Other Information |
29 |
Item 6. |
Exhibits |
31 |
Signatures |
32 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
PRELUDE THERAPEUTICS INCORPORATED
BALANCE SHEETS
(in thousands, except share data) |
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September 30, |
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December 31, |
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Assets |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted cash |
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Property and equipment, net |
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Operating lease right-of-use asset |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liability |
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Finance lease liability |
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Total current liabilities |
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Other liabilities |
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Operating lease liability |
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Total liabilities |
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Commitments (Note 8) |
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Stockholders’ equity: |
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Voting common stock, $ |
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Non-voting common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited interim financial statements.
1
PRELUDE THERAPEUTICS INCORPORATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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(in thousands, except share and per share data) |
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2025 |
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2024 |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income, net |
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Net loss |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Per share information: |
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Net loss per share of common stock, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding, basic |
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Comprehensive loss: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Unrealized gain (loss) on marketable securities, net of tax |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to unaudited interim financial statements.
2
PRELUDE THERAPEUTICS INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
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Voting common stock |
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Non-voting common |
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Additional paid-in |
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Accumulated other comprehensive |
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Accumulated |
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(in thousands, except shares) |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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income (loss) |
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deficit |
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Total |
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Balance at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock upon vesting of RSUs, net of |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Issuance of common stock upon exercise of prefunded warrants |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized loss on marketable securities, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock upon exercise of stock options & vesting of RSUs, net of |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Issuance of common stock under ESPP |
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— |
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— |
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— |
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— |
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— |
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Unrealized loss on marketable securities, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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|
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— |
|
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( |
) |
|
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( |
) |
|
Balance at June 30, 2025 |
|
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||||
Issuance of common stock upon exercise of stock options & vesting of RSUs, net of |
|
|
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— |
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— |
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— |
|
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( |
) |
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— |
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— |
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( |
) |
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Unrealized gain on marketable securities |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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|
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— |
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|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2025 |
|
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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|||||||
See accompanying notes to unaudited interim financial statements.
3
PRELUDE THERAPEUTICS INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
(UNAUDITED)
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Voting common stock |
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Non-voting common stock |
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Additional paid-in |
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Accumulated other comprehensive |
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Accumulated |
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(in thousands, except shares) |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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income (loss) |
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deficit |
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Total |
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Balance at January 1, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock upon exercise of stock options & vesting of RSUs, net of |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Unrealized loss on marketable securities, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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|
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— |
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|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2024 |
|
|
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|
$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
|
||||||
Issuance of common stock upon exercise of stock options & vesting of RSUs, net of |
|
|
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— |
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— |
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— |
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( |
) |
|
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— |
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— |
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( |
) |
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Issuance of common stock under ESPP |
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— |
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— |
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— |
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— |
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— |
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|||
Unrealized loss on marketable securities, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2024 |
|
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||||
Issuance of common stock upon exercise of stock options & vesting of RSUs, net of |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on marketable securities |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense, net of forfeitures of restricted stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2024 |
|
|
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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|||||||
See accompanying notes to unaudited interim financial statements.
4
PRELUDE THERAPEUTICS INCORPORATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine months ended September 30, |
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(in thousands) |
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2025 |
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2024 |
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Cash flows used in operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Noncash lease expense |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Amortization of premium and discount on marketable securities, net |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
Operating lease liabilities |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows provided by investing activities: |
|
|
|
|
|
|
||
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from maturities of marketable securities |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash provided by investing activities |
|
|
|
|
|
|
||
Cash flows used in financing activities: |
|
|
|
|
|
|
||
Payment of offering costs |
|
|
|
|
|
( |
) |
|
Proceeds from the issuance of common stock under ESPP |
|
|
|
|
|
|
||
Proceeds from the issuance of common stock in connection with the exercise of stock options |
|
|
|
|
|
|
||
Payment of withholding taxes related to stock-based compensation to employees |
|
|
( |
) |
|
|
( |
) |
Principal payments on finance lease liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of non-cash activities: |
|
|
|
|
|
|
||
Unrealized loss on marketable securities |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
See accompanying notes to unaudited interim financial statements.
5
PRELUDE THERAPEUTICS INCORPORATED
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1. Background
Prelude Therapeutics Incorporated (the “Company”) is a precision oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients. Since beginning operations in 2016, the Company has devoted substantially all its efforts to research and development, conducting preclinical and clinical studies, recruiting management and technical staff, administration, and raising capital.
2. Risks and liquidity
The Company faces a number of risks common to early-stage companies in the biotechnology industry. Principal among these risks are the uncertainties in the development process, development of the same or similar technological innovations by competitors, protection of proprietary technology, dependence on key personnel, compliance with government regulations and approval requirements, and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, adequate protection for the Company’s technology will be obtained, any products developed will obtain necessary government regulatory approval, or any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Since its inception, the Company has incurred operating losses and had an accumulated deficit of $
At September 30, 2025, the Company had cash, cash equivalents, restricted cash and marketable securities totaling $
In November 2025, the Company also announced changes in the research and development programs that it plans to devote its resources towards over the next twelve months. The Company believes that these changes provide some uncertainty around its preliminary cash flow estimates, and therefore, that its cash, cash equivalents, restricted cash and marketable securities may not be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the filing date of this Quarterly Report on Form 10-Q. As a result, substantial doubt exists about the Company's ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
To fund its operating expenses and capital expenditure requirements, the Company plans to seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.
6
3. Summary of significant accounting policies
The complete summary of significant accounting policies included in the Company’s financial statements for the year ended December 31, 2024 can be found in “Note 3. Summary of significant accounting policies” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2025.
Basis of presentation
The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. 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, 2024 found in the Company's Annual Report on Form 10-K filed with the SEC on March 10, 2025. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of the unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the unaudited interim financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Estimates and assumptions are periodically reviewed, and the effects of the revisions are reflected in the accompanying unaudited interim financial statements in the period they are determined to be necessary. The most significant estimate relates to accrued clinical trial expenses.
Income Taxes
Based upon the historical and anticipated future losses, management has determined that the deferred tax assets generated by net operating losses and research and development credits do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of September 30, 2025 and December 31, 2024.
Segment Information
Cash, Cash Equivalents and Restricted cash
The Company’s cash equivalents include short-term highly liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value in the accompanying balance sheets.
Restricted cash consists of a letter of credit for the benefit of the landlord in connection with the Company’s Chestnut Run Lease. See Note 8- Commitments for further details.
7
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that total to the amounts shown in the statement of cash flows:
(in thousands) |
|
September 30, |
|
|
December 31, |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash shown in statement of cash flows |
|
$ |
|
|
$ |
|
||
Marketable Securities
The Company’s marketable securities consist of investments in corporate debt securities and United States (“U.S.”) government debt securities that are classified as available-for-sale. The securities are carried at fair value with the unrealized gains and losses, net of tax, included in accumulated other comprehensive loss, a component of stockholders’ equity. Realized gains and losses as well as credit losses, if any, on marketable securities are included in the Company’s statements of operations. The Company classifies marketable securities that are available for use in current operations as current assets on the balance sheets.
Revenue Recognition
The Company recognizes revenue under Accounting Standard Codification 606 – Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company's revenue recognition analysis consists of the following steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognition of revenue as we satisfy each performance obligation.
The Company evaluates all promised goods and services within a customer contract and determines which goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract.
The transaction price is determined based on the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligations when (or as) the performance obligations are satisfied. The Company recognizes a liability when the Company has received payment but has not yet satisfied the related performance obligations.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period, including pre-funded warrants to purchase shares of common stock. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise of securities, such as stock options, and the effect from unvested restricted stock units which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
|
|
September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Unvested restricted stock units |
|
|
|
|
|
|
||
Stock options |
|
|
|
|
|
|
||
Employee stock purchase plan |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Amounts in the above table reflect the common stock equivalents.
8
Recently Issued Accounting Pronouncements
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited interim financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The Company anticipates that it will no longer be an emerging growth company as of December 31, 2025 and, as a result, we will no longer be able to take advantage of reduced disclosure and other obligations that are available to emerging growth companies after that date. However, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements and other obligations.
Accounting guidance not yet adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures related to the rate reconciliation and income taxes paid information. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard but does not expect that it will have a material impact on the financial statements and related disclosures.
4. Marketable Securities
The following provides detail of the Company's marketable securities.
(in thousands) |
|
Amortized Cost |
|
|
Gross unrealized gain |
|
|
Gross unrealized loss |
|
|
Fair Value |
|
||||
September 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
U.S. government securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The Company’s marketable securities generally have contractual maturity dates of 4 months or less. As of September 30, 2025, the Company had
5. Fair Value of Financial Instruments
Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The Company
9
follows the provisions of ASC 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:
The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:
|
|
Fair value measurement at reporting date using |
|
|||||||||
(in thousands) |
|
Quoted prices |
|
|
Significant |
|
|
Significant |
|
|||
September 30, 2025 |
|
|
|
|
|
|
|
|
|
|||
Assets |
|
|
|
|
|
|
|
|
|
|||
Cash equivalents (Money Market Funds) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|||
Corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
U.S. government securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Total marketable securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
Assets |
|
|
|
|
|
|
|
|
|
|||
Cash equivalents (Money Market Funds) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|||
Corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
U.S. government securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Total marketable securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
||
6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
(in thousands) |
|
September 30, |
|
|
December 31, |
|
||
Compensation and related benefits |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
10
7. Common Stock
The Company has two classes of common stock: “voting common stock” and “non-voting common stock.”
Shelf Registration Statements
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 $
Open Market Sales Agreement
In March 2023, in connection with filing a prospectus supplement to the shelf registration statement filed in November 2021 (the “2021 Shelf Registration Statement"), the Company entered into an Open Market Sales Agreement (the "Sales Agreement") with Jefferies LLC, as the sales agent, pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering amount of up to $
Pre-funded warrants
During the second quarter of 2023, the Company sold pre-funded warrants to purchase
The purchase price per share of each pre-funded warrant represented the per share offering price for the common stock, minus the $
The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return.
There were
8. Commitments
Leases
The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease (the “Chestnut Run Lease”). The premises include approximately
11
landlord's assets for accounting purposes. Costs incurred by the Company related to tenant improvements in excess of the landlord's allowance were treated as prepaid rent and increased the right-of-use asset on the commencement date.
In April 2024, the Company entered into a 12 month finance lease for equipment. The final payment under the agreement was made in April 2025.
The Company's operating lease costs for the three months ended September 30, 2025 and 2024 were $
(in thousands) |
|
|
|
|
|
|
|
|
||
Leases |
|
Classification |
|
September 30, |
|
|
December 31, |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Operating |
|
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Finance |
|
Property and equipment, net |
|
|
|
|
|
|
||
Total leased assets |
|
|
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current: |
|
|
|
|
|
|
|
|
||
Operating |
|
Current liabilities, operating lease liability |
|
$ |
|
|
$ |
|
||
Finance |
|
Current liabilities, finance lease liability |
|
|
|
|
|
|
||
Non-Current: |
|
|
|
|
|
|
|
|
||
Operating |
|
Operating lease liability |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
|
|
|
|
|
|
||
Operating lease |
|
|
|
|
% |
|
|
% |
||
Finance lease |
|
|
|
|
|
|
|
% |
||
Weighted-average remaining lease term (years) |
|
|
|
|
|
|
|
|
||
Operating lease |
|
|
|
|
|
|
|
|
||
Finance lease |
|
|
|
|
— |
|
|
|
|
|
Supplemental cash flow information related to our leases for the nine months ended September 30, 2025 and 2024 were as follows:
|
|
Nine months ended September 30, |
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating lease |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance lease |
|
|
|
|
|
|||
Financing cash flows from finance lease |
|
|
|
|
|
|||
Non-cash transaction |
|
|
|
|
|
|
||
Right-of-use asset obtained in exchange for lease obligations: |
|
|
|
|
|
|
||
Finance lease |
|
|
|
|
|
|
||
12
Future minimum annual lease payments for operating lease at September 30, 2025 are as follows:
(in thousands) |
Operating lease |
|
|
2025 (remaining) |
$ |
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
2030 |
|
|
|
Thereafter |
|
|
|
Total undiscounted lease payments |
|
|
|
Less imputed interest |
|
( |
) |
Lease liability |
$ |
|
|
The Company paid a security deposit for the Chestnut Run Lease in the form of a letter of credit of $
Employment Agreements
The Company has employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment agreements.
401(k) Defined Contribution Plan
The Company sponsors a 401(k) defined‑contribution plan covering all employees. Participants are permitted to contribute up to
Amended and Expanded AbCellera Research Collaboration Agreement
In 2023, the Company entered into a multi-year, multi-program agreement with AbCellera Biologics Incorporated ("AbCellera") to jointly discover, develop, and commercialize novel degrader antibody conjugates (“DACs”) for up to five programs ("the Collaboration Agreement"). Under the terms of the agreement, AbCellera will lead manufacturing activities and the Company will lead clinical development and global commercialization, subject to AbCellera’s option to co-promote any resulting commercial products in the United States. The Company concluded that the agreement with AbCellera will be accounted for under the scope of ASC 808, Collaborative Arrangements, as both parties will actively participate in joint operating activities and are exposed to significant risks and rewards. Costs related to the Collaboration Agreement were not material for the three and nine months ended September 30, 2025 and 2024.
During the third quarter of 2025 the Company amended its collaboration with AbCellera ("the Amended Agreement") and, subsequently in October 2025, further expanded the collaboration ("the Expanded License Agreement"). The Amended Agreement and Expanded License Agreement provided AbCellera a non-exclusive license to use certain of the Company’s degrader payloads to independently discover, develop and commercialize a select number of DACs against undisclosed antibody targets. The agreements also entailed other changes to overall resource allocation and collaboration governance. For the newly licensed DAC programs, AbCellera received world-wide rights to lead and fully control the licensed programs at its sole cost and expense and the Company is not responsible for any additional financial responsibilities or go forward development costs associated with those programs. The Company received an upfront non-refundable payment from AbCellera of $
The Company assessed the Amended Agreement signed during the third quarter of 2025 in accordance with ASC 606, Revenue from Contracts with Customer, and concluded that AbCellera is a customer in the context of the Amended Agreement. The Amended Agreement required the Company to transfer certain intellectual property and related know-how to AbCellera which represented the
13
only performance obligation in the Amended Agreement and was satisfied at a point in time, when the intellectual property and related know-how were transferred to AbCellera during the third quarter of 2025. The Company recognized revenues of $
License Agreement
In May 2024, the Company and Pathos AI, Inc. ("Pathos") entered into a license agreement under which the Company granted to Pathos an exclusive, sublicensable, world-wide license to its selective, brain-penetrant PRMT5 inhibitor, PRT811. Under the terms of the license agreement, the Company received a $
The Company assessed the license agreement with Pathos in accordance with ASC 606, Revenue from Contracts with Customer, and concluded that Pathos is a customer. The license agreement with Pathos included the transfer of the following goods or services: (i) exclusive license to PRT811, (ii) transfer of licensed know-how and materials (i.e. datasets, regulatory and manufacturing documents, etc.), (iii) participation in a Joint Communication Committee ("JCC"), and (iv) execution of a quality agreement pursuant to which the Company transferred title to certain API. The Company evaluated all of the promised goods or services within the contract and determined which goods and services were separate performance obligations. The Company determined that Pathos could not benefit from the license separately from the related know-how and materials, accordingly they represent one combined performance obligation. The execution of a quality agreement pursuant to which the Company transferred title to certain API was identified as a separate performance obligation. The Company also determined the participation in the JCC is immaterial in the context of the license agreement as the Company has no decision-making ability through its participation in the JCC.
The transaction price was allocated to the performance obligation based upon relative standalone selling prices, which were estimated for (i) the exclusive license and know-how and materials at $
With respect to the accounting principles identified above, each performance obligation was recognized at a point in time. The Company determined that the performance obligation for the license and transfer of related know-how and materials was fully satisfied when the license was granted and key know-how and materials were transferred to Pathos as that was the point at which Pathos could fully use and benefit from the license to PRT811. The performance obligation for the execution of a quality agreement pursuant to which the Company transferred title to certain API was satisfied when the legal title to the API was transferred. During the third quarter of 2024, the Company satisfied the performance obligation related to the exclusive license and transfer of related know-how and materials which resulted in the recognition of revenue for $
There was
Other Research and Development Arrangements
The Company enters into agreements with clinical research organizations ("CROs") to assist in the performance of research and development activities. Expenditures to CROs represent a significant cost in clinical development for the Company.
9. Segments
The Company currently operates as
The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the segment based on net loss, which is reported on the statement of operations and comprehensive
14
loss as net loss. The measure of segment assets is reported on the balance sheet as total assets.
To date, the Company has not recognized any revenue from product sales, and the Company does not expect to generate any revenue in the foreseeable future. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment and to make decisions about the allocation of resources, along with cash forecast models.
The following tables summarizes the significant expense categories regularly reviewed by the CODM for the three and nine months ended September 30, 2025 and 2024:
|
|
Three months ended September 30 |
|
|
Nine months ended September 30 |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PRT3789 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PRT7732 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Discovery programs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General costs, including personnel related |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
10. Stock-Based Compensation
The Company has
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.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Stock Options
The following table summarizes stock option activity for the periods indicated:
|
|
Number |
|
|
Weighted |
|
|
Weighted |
|
|||
Outstanding at January 1, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
$ |
|
|
|
|
|||
Exercised |
|
|
( |
) |
|
$ |
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
||
Outstanding at September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
Exercisable at September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
At September 30, 2025, the aggregate intrinsic value of outstanding options and exercisable options was $
The following table summarizes information about stock options outstanding at September 30, 2025 under the Plan:
|
|
Options Outstanding |
|
|
Options Exercisable |
|
||||||||||||||
Range of Exercise Prices |
|
Number |
|
|
Weighted Average |
|
|
Weighted |
|
|
Number |
|
|
Weighted |
|
|||||
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|||||
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The weighted-average grant date fair value of options granted was $
The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:
|
|
Nine months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected life (in years) |
|
|
|
|
|
|
||
Expected dividend yield |
|
|
— |
|
|
|
— |
|
Restricted Stock Units
The Company granted restricted stock units (“RSUs”) to employees that generally vest over a
16
The following table summarizes activity related to RSU stock-based payment awards:
|
|
Number of |
|
|
Weighted-average |
|
||
Unvested balance at January 1, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Unvested balance at September 30, 2025 |
|
|
|
|
$ |
|
||
The Company recorded stock-based compensation expense of $
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of September 30, 2025, had
Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the Company's compensation committee. Eligible employees may purchase the Company’s common stock at
The ESPP is considered compensatory under the FASB stock compensation rules. 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 $
11. Workforce Reduction
During the second quarter of 2025, the Company reduced its current workforce by approximately
The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce for the nine months ended September 30, 2025:
(in thousands) |
Amount accrued at December 31, 2024 |
|
|
Charges |
|
|
Amount Paid |
|
|
Adjustments |
|
|
Amount accrued at September 30, 2025 |
|
|||||
Workforce reduction |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
17
12. Subsequent Events
Exclusive Option Agreement
On November 3, 2025, the Company entered into an Exclusive Option Agreement (the “Option Agreement”) with Incyte to acquire the Company’s mutative selective JAK2V617F JH2 inhibitor program (the “Program”) for patients with myeloproliferative neoplasms.
Under the Option Agreement, Incyte will receive an exclusive option to acquire the Company’s entire right, title, and interest in and to certain assets, properties, and rights related to the Program, including the Company’s library of preclinical candidates (collectively, the “Transferred Assets”). The Company received $
The Option Agreement includes, as an exhibit, the form of an Asset Purchase Agreement (the “APA”), which contemplates the sale, transfer, assignment, and conveyance by the Company to Incyte, and the purchase, acquisition, and assumption by Incyte from the Company, of the Company’s entire right, title, and interest in and to the Transferred Assets in the event Incyte exercises its option under the Option Agreement.
The Company expects to continue to advance the Program. At any time commencing on the effective date of the Option Agreement until the later of (a) 30 days after the Company’s delivery of the IND-ready data package or (b) 15 months after the effective date of the Option Agreement (which 15 month period shall automatically toll for the Company to deliver the IND-ready package but such tolling will not exceed 3 months unless otherwise agreed by the parties) (the “Option Period”), Incyte may elect to exercise its exclusive option to acquire the Program and associated assets from the Company pursuant to the APA for $
The Company will continue to own and develop all Transferred Assets. If the option is exercised during the Option Period and the parties enter into and close the transaction set forth in the APA, Incyte will own all Transferred Assets subject to the Company’s right, in its sole discretion and cost, to continue to conduct development activities during the Option Period to nominate and select development candidate(s) for the Program. If Incyte elects to not exercise its option to acquire the Program, all Transferred Assets would remain in the sole ownership and control of the Company.
Securities Purchase Agreement
Concurrently with the Option Agreement, on November 3, 2025, the Company entered into a securities purchase agreement with Incyte (the “Securities Purchase Agreement”), pursuant to which Incyte agreed to purchase
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 March 10, 2025, or our 2024 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, recessionary concerns, the effects of a continued 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.
These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
Overview
Prelude is a precision oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients. By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our clinical development capabilities, we have built an efficient, drug discovery engine and the development expertise necessary to identify compelling biological targets and create new chemical entities, or NCEs, that we advance into clinical trials. We believe our approach could result in better targeted cancer therapies. Our discovery excellence has been supported by our steady progress in creating a wholly-owned, internally developed pipeline. We also are working with our partner AbCellera Biologics Incorporated ("AbCellera") on an early-stage discovery program involving potent degraders as payloads for novel antibodies targeting tumor specific antigens. Since our inception in 2016, we have received clearance from the U.S. Food and Drug Administration, or the FDA, for multiple investigational new drug applications, or INDs, and successfully advanced several programs into clinical trials. In addition, we have other differentiated proprietary programs in various stages of preclinical development.
By focusing on developing molecules using broad mechanisms that have multiple links to oncogenic driver pathways in select patients, we have developed a diverse pipeline consisting of multiple distinct programs including kinases, targeted protein degraders, and degrader antibody conjugates ("DAC"). Our pipeline is designed to serve patients with high unmet medical need, where there are limited or no treatment options. We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms.
Myeloproliferative neoplasms ("MPN") are hematopoietic disorders arising from clonal expansion of hematopoietic stem cells (HSC) in the bone marrow. Current treatment options for MPN patients offer symptomatic benefit but fail to eliminate disease-initiating clones leading to treatment resistance and progression to secondary acute myeloid leukemia. Therapeutic approaches that can selectively eliminate disease-initiating HSCs and induce molecular remission are an unmet medical need.
Mutations in JAK2, calreticulin (CALR) and MPL are phenotypic drivers of disease in over 90% of MPN cases. CALR mutations are the second most common driver alteration in MPN, accounting for 20-30% of all cases. Selective expression of mutant CALR on diseased cells but not on normal cells makes CALR a high value target for antibody-directed therapies in MPN.
JAK2V617F is the primary driver mutation responsible for disease progression in the majority of patients living with MPNs. We have discovered novel allosteric inhibitors that bind into the JAK2 JH2 “deep pocket” where the V617F mutation resides. These candidates demonstrate mutant specific inhibition in multiple preclinical models of MPNs. We believe this approach may have the potential to reduce mutant allele burden, slow or even reverse disease progression, and transform treatment outcomes for MPN patients.
As previously announced on November 4, 2025, we have entered into an exclusive option agreement with Incyte Corporation ("Incyte"). Under the option agreement, Incyte will receive an exclusive option to acquire our entire right, title, and interest in and to certain assets, properties, and rights related to the JAK2V617F JH2 inhibitor program, including our library of preclinical candidates
19
(collectively, the “Transferred Assets”). We expect to advance the JAK2V617F program to pre-defined milestones. Incyte may elect to exercise its exclusive option during the option period to acquire the program and associated assets from us for $100 million. As the JAK2V617F program candidates advance in the clinic, we would be eligible to receive up to $775 million in additional clinical and regulatory milestones, and single digit royalties on global net sales. Combined, total potential cash payments from the transaction, excluding royalties, could reach up to $910 million.
We have discovered and are developing a series of selective and orally bioavailable KAT6A selective degraders. We have selected a development candidate and remain on track to file an IND in mid-2026. We believe that selectively degrading KAT6A has the potential for improved efficacy, tolerability and combinability with other agents relative to non-selective inhibitors of KAT6A/B. The Company recently presented preclinical data supporting this hypothesis at the American Association for Cancer Research Annual Meeting 2025.
In June 2025, at the European Hematology Association, we delivered an oral presentation about our mutated calreticulin (mCALR) discovery efforts, including the first-in-class CALR-targeted DACs that selectively target mutant CALR expressing cells, with the potential to achieve responses by eliminating MPN clones. These data demonstrate that a CALRxSMARCA2/4 degrader antibody conjugate can selectively degrade SMARCA2/4 in CALR mutant cells and robustly inhibit CALR-mutant cell growth in vitro and in vivo.
Drawing on our expertise in targeted protein degradation, we have discovered and optimized a series of proprietary degrader payloads for use in discovering and developing DACs. We disclosed first data at the 36th EORTC-NCI-AACR Symposium describing preclinical proof-of-concept using a novel, potent SMARCA2/4 dual degrader as a degrader payload conjugated to multiple antibodies. Prelude’s SMARCA2/4 dual degraders have shown picomolar potency with potential for increased efficacy, selectivity and improved therapeutic index. DACs have potential to expand the reach of SMARCA degrader technology to cancers without SMARCA4 mutations.
During the third quarter of 2025, and as a subsequent event in October 2025, we restructured aspects of the collaboration agreement with AbCellera to allow AbCellera to independently discover, develop and commercialize select undisclosed DACs by providing a non-exclusive license to the Company’s degrader payloads among other changes to overall resource allocation, governance, and operational aspects of the collaboration.
On November 4, 2025 we announced that we decided to pause the clinical development of our SMARCA2 degrader program which is comprised of PRT3789 and PRT7732. PRT3789 is a first-in-class, highly selective degrader of SMARCA2 protein, which along with SMARCA4 controls gene regulation through chromatin remodeling. PRT7732 is >1000-fold selective for SMARCA2 vs. SMARCA4 and demonstrates robust activity in SMARCA4 deficient cancer models both as monotherapy and in combination with docetaxel at well-tolerated doses. The decision to pause was based on a comprehensive review of clinical data generated to date and our assessment of the capital and resource allocation required to advance the SMARCA2 program, versus the JAK2 and KAT6A programs, to key points of value inflection.
Regained Nasdaq Compliance
On March 27, 2025, the Company received a letter (the “Bid Price Notice”) from the Listing Qualifications staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the prior 30 consecutive business days, the Company was not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). On September 18, 2025, the Company received a letter from Nasdaq notifying the Company that it had regained compliance with the Minimum Bid Price Requirement and that the matter is now closed.
Components of Results of Operations
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 $83.0 million and $98.4 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $666.6 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
20
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.
Revenue
To date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue in the foreseeable future. During the three months ended September 30, 2025, we recognized revenue from amendments related to our collaboration agreement with AbCellera. No other revenue was recognized during the three months ended September 30, 2025. 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 in the form of milestone payments, royalties, or product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred, including:
We track outsourced development costs and other external research and development costs to specific product candidates on a program-by-program basis, fees paid to CROs, CMOs and research laboratories in connection with our preclinical 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 activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect to continue to incur research and development expenses over the next several years related to personnel costs, including stock-based compensation, clinical trials, including later-stage clinical trials, for current and future product candidates and preparing regulatory filings for our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. 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 to continue to incur general and administrative expense in the future to support our continued research and development activities and potential commercialization efforts. These expenses will likely include costs related to the hiring of personnel and fees to outside consultants and legal support, among other expenses. The costs associated with being a public company include expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and
21
Exchange Commission, or SEC, insurance and investor relations costs. If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.
Other Income, Net
Other income, net consists primarily of interest earned on our cash equivalents and marketable securities and grant income received from the State of Delaware. We anticipate re-applying for grants from the State of Delaware from time to time as long as we maintain qualifying headcount levels.
Income Taxes
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, 2025 and 2024
The following table sets forth our results of operations.
|
|
Three months ended |
|
|
Change |
|
||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
|
|
|||
Revenue |
|
$ |
6,500 |
|
|
$ |
3,000 |
|
|
$ |
3,500 |
|
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
21,708 |
|
|
|
29,457 |
|
|
|
(7,749 |
) |
General and administrative |
|
|
5,210 |
|
|
|
7,919 |
|
|
|
(2,709 |
) |
Total operating expenses |
|
|
26,918 |
|
|
|
37,376 |
|
|
|
(10,458 |
) |
Loss from operations |
|
|
(20,418 |
) |
|
|
(34,376 |
) |
|
|
13,958 |
|
Other income, net |
|
|
693 |
|
|
|
2,105 |
|
|
|
(1,412 |
) |
Net loss |
|
$ |
(19,725 |
) |
|
$ |
(32,271 |
) |
|
$ |
12,546 |
|
Revenue
Revenue for the three months ended September 30, 2025 related to amendments to the collaboration agreement with AbCellera. During the third quarter of 2025, we satisfied the single performance obligation and recognized revenue of $6.5 million.
Revenue for the three months ended September 30, 2024 related to our license agreement with Pathos AI, Inc. During the third quarter of 2024, we satisfied the performance obligation related to the exclusive license and transfer of related know-how and materials which resulted in the recognition of revenue for $3.0 million.
Research and Development Expenses
Research and development expenses decreased from $29.5 million for the three months ended September 30, 2024 to $21.7 million for the three months ended September 30, 2025. Included in research and development expenses for the three months ended September 30, 2025, was $1.4 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $3.4 million for the three months ended September 30, 2024. Along with the decrease in stock-based compensation expense, research and development expenses decreased due to a decrease in expense related to our SMARCA2 clinical trials. 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.
22
Research and development expenses by program are summarized in the table below. Expenses for programs that have been discontinued are included in Other.
|
|
Three months ended |
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
||
PRT3789 |
|
$ |
3,274 |
|
|
$ |
5,056 |
|
PRT7732 |
|
|
1,878 |
|
|
|
1,903 |
|
Discovery programs |
|
|
2,901 |
|
|
|
3,217 |
|
Other |
|
|
553 |
|
|
|
3,453 |
|
Internal costs, including personnel related |
|
|
13,102 |
|
|
|
15,828 |
|
|
|
$ |
21,708 |
|
|
$ |
29,457 |
|
General and Administrative Expenses
General and administrative expenses decreased from $7.9 million for the three months ended September 30, 2024 to $5.2 million for the three months ended September 30, 2025. Included in general and administrative expenses for the three months ended September 30, 2025, was $1.0 million of non-cash expense related to stock-based compensation expense compared to $2.5 million for the three months ended September 30, 2024. The decrease in general and administrative expenses was primarily driven by a decrease in stock-based compensation expense due to the tapering off of the vesting period of prior granted options and lower valuation on more recent grants due to the decrease in our stock price.
Other Income, net
Other income, net decreased from $2.1 million for the three months ended September 30, 2024, to $0.7 million for the three months ended September 30, 2025 primarily due to lower income earned our investments due to lower balances.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The following table sets forth our results of operations.
|
|
Nine months ended |
|
|
Change |
|
||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
|
|
|||
Revenue |
|
$ |
6,500 |
|
|
$ |
3,000 |
|
|
$ |
3,500 |
|
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
76,308 |
|
|
$ |
86,375 |
|
|
$ |
(10,067 |
) |
General and administrative |
|
|
17,410 |
|
|
|
22,508 |
|
|
|
(5,098 |
) |
Total operating expenses |
|
|
93,718 |
|
|
|
108,883 |
|
|
|
(15,165 |
) |
Loss from operations |
|
|
(87,218 |
) |
|
|
(105,883 |
) |
|
|
18,665 |
|
Other income, net |
|
|
4,177 |
|
|
|
7,441 |
|
|
|
(3,264 |
) |
Net loss |
|
$ |
(83,041 |
) |
|
$ |
(98,442 |
) |
|
$ |
15,401 |
|
Revenue
Revenue for the nine months ended September 30, 2025 related to amendments to the collaboration agreement with AbCellera. During the third quarter of 2025, we satisfied the single performance obligation and recognized revenue of $6.5 million.
Revenue for the nine months ended September 30, 2024 related to our license agreement with Pathos AI, Inc. During the third quarter of 2024, we satisfied the performance obligation related to the exclusive license and transfer of related know-how and materials which resulted in the recognition of revenue for $3.0 million.
23
Research and Development Expenses
Research and development expenses decreased from $86.4 million for the nine months ended September 30, 2024 to $76.3 million for the nine months ended September 30, 2025. Included in research and development expenses for the nine months ended September 30, 2025, was $5.9 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $9.8 million for the nine months ended September 30, 2024. Research and development expenses decreased primarily due to lower stock-based compensation expense due to lower valuation on more recent grants due to the decrease in our stock price along with a decrease in expense related to our discontinued clinical trials, primarily PRT2527. 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.
Research and development expenses by program are summarized in the table below. Expenses for programs that have been discontinued are included in Other.
|
|
Nine months ended |
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
||
PRT3789 |
|
$ |
11,542 |
|
|
$ |
13,931 |
|
PRT7732 |
|
|
7,614 |
|
|
|
5,618 |
|
Discovery programs |
|
|
8,657 |
|
|
|
10,105 |
|
Other |
|
|
3,254 |
|
|
|
9,596 |
|
General costs, including personnel related |
|
|
45,241 |
|
|
|
47,125 |
|
|
|
$ |
76,308 |
|
|
$ |
86,375 |
|
General and Administrative Expenses
General and administrative expenses decreased from $22.5 million for the nine months ended September 30, 2024 to $17.4 million for the nine months ended September 30, 2025. The decrease was primarily driven by a decrease in non-cash expense related to stock-based compensation expense. Included in general and administrative expenses for the three months ended September 30, 2025, was $4.2 million of stock-based compensation expense compared to $7.7 million for the three months ended September 30, 2024. The decrease was due to the tapering off of the vesting period of prior granted options and lower valuation on more recent grants due to the decrease in our stock price.
Other Income, net
Other income, net decreased from $7.4 million for the nine months ended September 30, 2024, to $4.2 million for the nine months ended September 30, 2025 primarily due to lower income earned our investments due to lower balances partially offset by the receipt and recognition of research and development tax credits.
Liquidity and Capital Resources
Overview
Since our inception, we have not recognized any product revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all.
At September 30, 2025 we had cash, cash equivalents, restricted cash and marketable securities totaling $58.2 million. Subsequent to September 30, 2025, we received $6 million from our expanded collaborative agreement with AbCellera in October 2025 and we received $60 million in capital, comprised of an initial payment of $35 million in cash, plus a $25 million equity investment, from Incyte Corporation in November 2025. See Note 12-Subsequent Events for additional information. Based on preliminary estimates, we believe that these funds, together with our existing cash, cash equivalents, restricted cash, and marketable securities could extend our cash runway into 2027.
In November 2025, we also announced changes in the research and development programs that we plan to devote our resources towards over the next twelve months. We believe that these changes provide some uncertainty around our preliminary cash flow estimates, and therefore, that our cash, cash equivalents, restricted cash and marketable securities may not be sufficient to fund our
24
operating expenses and capital expenditure requirements for at least the next twelve months from the filing date of this Quarterly Report on Form 10-Q. As a result, substantial doubt exists about our ability to continue as a going concern.
Since our inception, we have funded our operations primarily through the sale of convertible preferred stock, common stock, and pre-funded warrants. We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all. 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.
Funding Requirements
Our primary use of cash is to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
We will need additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.
In May 2024, we 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, 2025 there was $400 million remaining under the 2024 Shelf Registration Statement.
In March 2023, in connection with filing a prospectus supplement to our shelf registration statement previously filed in November 2021 (the “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. 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. In November 2024, the 2021 Shelf Registration
25
Statement expired with respect to the shares to be sold under the Sales Agreement. Accordingly, 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. We have $75.0 million remaining under the Sales Agreement as of September 30, 2025.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated:
|
|
Nine months ended |
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(79,421 |
) |
|
$ |
(82,144 |
) |
Net cash provided by investing activities |
|
|
113,798 |
|
|
|
68,073 |
|
Net cash used in financing activities |
|
|
(128 |
) |
|
|
(86 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
$ |
34,249 |
|
|
$ |
(14,157 |
) |
Operating Activities
During the nine months ended September 30, 2025, we used $79.4 million of cash in operating activities. Cash used in operating activities reflected our net loss of $83.0 million and a $8.7 million net decrease in our operating assets and liabilities offset by noncash charges of $12.3 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.
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.
Investing Activities
During the nine months ended September 30, 2025, net cash provided by investing activities of $113.8 million consisted primarily of $148.0 million in proceeds from maturities of marketable securities, partially offset by $34.1 million in purchases of marketable securities. During the nine months ended September 30, 2024, net cash used in 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.
Financing Activities
For the nine months ended September 30, 2025 net cash used in financing activities was primarily for principal payments on our finance lease. For the nine months ended September 30, 2024 net cash provided by 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.
26
Critical Accounting Estimates
During the three months ended September 30, 2025, there were no other 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 Estimates” in our 2024 Annual Report on Form 10-K.
Emerging Growth Company and Smaller Reporting Company Status
In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from complying with new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 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.
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. We anticipate that we will no longer be an emerging growth company as of December 31, 2025 and, as a result, we will no longer be able to take advantage of reduced disclosure and other obligations that are available to emerging growth companies after that date.
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. We may continue to be a smaller reporting company after if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we remain a smaller reporting company once we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item with respect to the period ending September 30, 2025.
27
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedure
As of September 30, 2025, management, with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that, as of September 30, 2025, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
Management determined that, as of September 30, 2025, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II— OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. In addition, we may receive letters alleging infringement of patents or other intellectual property rights. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business, operating results, cash flows or financial conditions should such litigation be resolved unfavorably. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Before making your decision to invest in shares of our common stock, you should carefully consider the risks and uncertainties described under Part I, Item 1A, “Risk Factors” in our 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2025 in addition to the risk factors below.
Our financial statements contain a statement regarding a substantial doubt about the Company’s ability to continue as a going concern.
We had no revenue from product sales during the nine months ended September 30, 2025. Our primary uses of cash are to fund our planned clinical trials, research and development expenditures and for operating expenses. Cash used to fund operating expenses is based on the assumption that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We face certain risks and uncertainties that are present in many emerging pharmaceutical companies regarding product development, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities. We currently have no customers or pharmaceutical products to sell or distribute. Absent additional funding, we believe that our cash, cash equivalents, and marketable securities may not be sufficient to fund our operating expenses and capital expenditure requirements for at least the next twelve months from the filing date of this Quarterly Report on Form 10-Q. These risks and other factors raise substantial doubt about our ability to continue as a going concern.
Our ability to continue as a going concern is dependent on our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from the ordinary course of business operations when they become due. The substantial doubt about our ability to continue as a going concern may affect the price of our common stock, may impact our relationship with third parties with whom we do business and may impact our ability to raise additional capital.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended September 30, 2025 we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a) Disclosure provided pursuant to Item 3.02 of Form 8-K. Unregistered Sales of Equity Securities and Item 8.01 of Form 8-K. Other Events.
29
On November 10, 2025, the Company issued 6,250,000 shares (the “Shares”) of the Company’s non-voting common stock at a price of $4.00 per share for a total of $25.0 million to Incyte Corporation (“Incyte”) pursuant to a securities purchase agreement (the “Securities Purchase Agreement”), dated November 3, 2025, by and between the Company and Incyte (the “Closing”). Pursuant to the Company’s Amended and Restated Certificate of Incorporation and subject to the Beneficial Ownership Limitation as set forth therein, Incyte may elect to convert the Shares into voting shares of the Company’s common stock at any time.
In connection with the Closing, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with Incyte pursuant to which the Company agreed to prepare and file a registration statement on Form S-3 with the Securities and Exchange Commission (the “SEC”) registering the resale of the Shares by Incyte (the “Resale Registration Shelf”), (i) as promptly as reasonably practicable following the request of Incyte, and in any event within sixty (60) days of such request, (ii) or no later than thirty (30) days after the Closing of the sale of the non-voting common stock. The Company also agreed to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable after filing the Resale Registration Shelf.
Based in part upon the representations of Incyte in the Securities Purchase Agreement, the offering and sale of the Shares will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Shares will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements. The sale of the securities will not involve a public offering. Incyte represented that it is an accredited investor, as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and that it is acquiring the Shares for investment purposes only and not with a view to any distribution of the Shares in violation of the United States federal securities laws.
The Company intends to apply the net proceeds from the sale of the Shares pursuant to the Securities Purchase Agreement to advance its pipeline, including the KAT6A program, the JAK2V617F program, and for working capital and general corporate purposes.
(b) None.
(c)
30
Item 6. Exhibits.
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
Exhibit Number |
|
Description |
Form |
File No. |
Exhibit No. |
Exhibit Filing Date |
Filed/Furnished Herewith |
|
|
|
|
|
|
|
X |
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
|
|
|
|
X |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
X |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
|
X |
*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Prelude Therapeutics Incorporated |
|
|
|
|
|
Date: November 12, 2025 |
|
By: |
/s/ Krishna Vaddi |
|
|
|
Krishna Vaddi, PhD |
|
|
|
Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
Date: November 12, 2025 |
|
By: |
/s/ Bryant Lim |
|
|
|
Bryant Lim |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
32
FAQ
What were PRLD’s key Q3 2025 financial results?
How much cash and marketable securities did PRLD have at quarter‑end?
What new capital did PRLD receive after the quarter?
How many PRLD shares are outstanding now?
Did PRLD issue a going concern warning?
What program changes did PRLD announce?
Did PRLD regain Nasdaq compliance?
