Prelude Therapeutics(PRLD) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited interim financial statements show a net loss of $32.1 million and substantial doubt about the company's ability to continue as a going concern Balance Sheets (Unaudited) Total assets decreased to $141.3 million, driven by a reduction in marketable securities and a decline in stockholders' equity Condensed Consolidated Balance Sheets | (in thousands) | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $40,269 | $12,474 | | Marketable securities | $58,805 | $121,140 | | Total current assets | $102,403 | $135,895 | | Total assets | $141,260 | $175,515 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $19,787 | $25,641 | | Total liabilities | $38,082 | $44,056 | | Accumulated deficit | $(615,648) | $(583,563) | | Total stockholders' equity | $103,178 | $131,459 | Statements of Operations and Comprehensive Loss (Unaudited) The company reported a net loss of $32.1 million for Q1 2025, a slight increase from the prior year, driven by higher R&D expenses Condensed Consolidated Statements of Operations and Comprehensive Loss | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $28,816 | $27,409 | | General and administrative | $5,790 | $6,934 | | Total operating expenses | $34,606 | $34,343 | | Loss from operations | $(34,606) | $(34,343) | | Other income, net | $2,521 | $2,912 | | Net loss | $(32,085) | $(31,431) | | Net loss per share | $(0.42) | $(0.42) | Statements of Changes in Stockholders' Equity (Unaudited) Stockholders' equity declined to $103.2 million, primarily due to the quarterly net loss of $32.1 million - The primary drivers for the change in stockholders' equity during the first quarter of 2025 were the net loss of $32.1 million and stock-based compensation of $3.8 million[16] Statements of Cash Flows (Unaudited) Net cash used in operations was $34.2 million, offset by $62.2 million provided by investing activities from maturities of marketable securities Condensed Consolidated Statements of Cash Flows | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,231) | $(31,791) | | Net cash provided by investing activities | $62,186 | $31,221 | | Net cash used in financing activities | $(160) | $(14) | | Net increase (decrease) in cash | $27,795 | $(584) | Notes to Unaudited Interim Financial Statements Notes highlight an accumulated deficit of $615.6 million and substantial doubt about the company's ability to continue as a going concern - The company has an accumulated deficit of $615.6 million as of March 31, 2025, and has incurred operating losses since inception[31] - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern, as its cash, cash equivalents, and marketable securities of $103.1 million are not sufficient to fund operations for at least the next twelve months[32] - Total stock-based compensation expense was $3.8 million for the three months ended March 31, 2025, down from $5.5 million in the prior year period[80] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its clinical-stage oncology focus, financial results, significant liquidity concerns, and a Nasdaq delisting notice Overview The company is a clinical-stage precision oncology firm focusing on its lead SMARCA2 degrader programs, PRT3789 and PRT7732 - The company's lead opportunities are its first-in-class SMARCA2 degrader compounds, PRT3789 and PRT7732, which are expected to demonstrate clinical proof-of-concept in 2025[94] - PRT3789 (IV) has completed monotherapy dose escalation, with 500 mg once weekly selected as the recommended Phase 2 dose[97] - The oral SMARCA2 degrader, PRT7732, has advanced rapidly in its Phase 1 trial, with an initial data update also expected in H2 2025[99] - On March 27, 2025, the company received a delisting notice from Nasdaq for failing to maintain a minimum bid price of $1.00 per share[104][106] Results of Operations Operating expenses remained stable, with a $1.4 million increase in R&D costs offset by a $1.1 million decrease in G&A expenses Comparison of the Three Months Ended March 31, 2025 and 2024 | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $28,816 | $27,409 | $1,407 | | General and administrative | $5,790 | $6,934 | $(1,144) | | Total operating expenses | $34,606 | $34,343 | $263 | | Net loss | $(32,085) | $(31,431) | $(654) | - The increase in R&D expenses was primarily due to higher costs related to the company's SMARCA2 clinical trials[121] - The decrease in G&A expenses was primarily driven by a reduction in non-cash stock-based compensation expense[124] Liquidity and Capital Resources The company's $103.1 million in cash and securities is insufficient to fund operations for the next twelve months, raising going concern doubts - As of March 31, 2025, the company had $103.1 million in cash, cash equivalents, restricted cash, and marketable securities[127] - The company believes its existing cash will not be sufficient to fund operations for at least the next twelve months, which raises substantial doubt about its ability to continue as a going concern[127] - The company has a $400 million shelf registration statement and an Open Market Sales Agreement for up to $75.0 million, providing potential avenues for future financing[132][133] Cash Flows Cash from investing activities more than offset cash used in operations, resulting in a net cash increase for the quarter Cash Flow Summary | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,231) | $(31,791) | | Net cash provided by investing activities | $62,186 | $31,221 | | Net cash used in financing activities | $(160) | $(14) | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Prelude Therapeutics is not required to provide this information - The company is a smaller reporting company and is not required to provide the information required under this item[147] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Based on an evaluation as of March 31, 2025, the Principal Executive Officer and Principal Financial and Accounting Officer concluded that the company's disclosure controls and procedures were effective[148] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[149] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not presently a party to any legal proceedings that management believes would have a material adverse effect on its business[151] Risk Factors Key risks include potential Nasdaq delisting and substantial doubt about the company's ability to continue as a going concern - The company is at risk of being delisted from Nasdaq for failing to meet the minimum bid price requirement of $1.00 per share[153][154][155] - The financial statements include a statement regarding substantial doubt about the company's ability to continue as a going concern, as existing cash will not be sufficient to fund operations for at least the next twelve months[158] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[160] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[161] Mine Safety Disclosures This item is not applicable to the company - Not applicable[162] Other Information There is no other information to report for the period - None[163] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - The exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and interactive data files (XBRL)[166]