Kris Vaddi
Founder and CEO, Prelude Therapeutics
When Kris Vaddi and his team at Prelude Therapeutics decided to take their specialty cancer drug development company public, he never dreamed that it would turn into a “unicorn,” or a company worth at least $1 billion on its first day trading.
Led by Vaddi, a founding researcher at Incyte Corp. who now serves as Prelude’s CEO, the company has drawn increasing international attention for its work on small molecule inhibitors, a developing therapy that is more targeted in approach with fewer side effects than traditional cancer therapies like chemotherapy or radiation.
Like most initial public offerings (IPOs) though, Wilmington-based Prelude is pre-revenue, having yet to make a dollar on its promising research. That didn’t stop investors from pushing its stock from $19 a share at IPO to more than $73 as of Dec. 17 – a nearly 300% increase.
The company brought in $166.6 million through its public offering – more than all three rounds of its venture capital combined – but like many IPOs this year, potentially left money on the table as its shares “popped,” rising more than 30% on the first day. For what it’s worth, Vaddi doesn’t hold any regrets on the pricing strategy.
“Markets do what they do, and I don’t think anybody could have predicted where it is today,” he told Delaware Business Times in his first interview since going public. “Everyone in the industry, I’m sure, was kind of surprised because a lot of investors pre-COVID were concerned about the capital needs of a company.”
Vaddi said that he’s seen a tremendous amount of interest in life sciences companies this year, and especially ones specializing in oncology, or the study of cancer. Prelude is working on treatments for blood, brain, and lymph node cancers.
“If you look at the Class of 2020 IPOs, there’s a lot of exciting companies with exciting science but a significant number of those companies are either preclinical or very, very early clinical,” he said of the stage where companies begin testing their drugs on human patients.
With a market cap of more than $4 billion, Prelude is now the fourth most-valuable stock headquartered in Delaware – even ahead of local giants like DuPont and WSFS Bank. Vaddi credits that shareholder enthusiasm to the team of about 70 executives and researchers who have years of experience at other firms as well as Prelude’s commitment to building a viable pipeline of drug prospects.
That pipeline includes three drugs that are currently in clinical trials for brain cancer metastases, blood cancer and solid tumors.
“Brain cancer, after all of these years, is still one of the most highly unmet needs in cancer. Other than the one chemotherapy, we don’t have any treatment that really makes a difference for these patients,” he said, underscoring the importance of the research.
Vaddi said that Prelude’s discovery team is also working on a fourth preclinical drug that the company expects to file an investigational new drug application for in the middle of next year. It hopes to start clinical trials by the end of 2021.
Conceding that drug development is exceedingly capital-intensive, Vaddi said that Prelude was consciously built to wholly own its drug pipeline rather than license out discoveries in their early stages.
“We would definitely consider partnerships down the road, but they have to be specific and not simply for the purpose of non-dilutive financing,” he said.
With their 2019 Series B financing scheduled to last through 2020, Prelude intended to return to the venture capital market to fund its 2021 operations. As they explored their options, however, they noticed that the IPO market was heating up and attracting “very reasonable valuations and investors.”
“We were very encouraged to get feedback from some of the early road shows and interactions we had with very high-quality investors,” he recalled. “We’re very happy with how it went, with the roster of very high-quality mutual funds, hedge funds and other investors, many of whom have a long-term horizon, who own a significant part of our stock. That is a good outcome.”
It’s also a major milestone for Vaddi, who spent 14 years at Incyte and helped develop one of its most important drugs, Jakafi. He said he began to assess what he wanted to do in his more than two-decade career in 2014.
“What I enjoy most is really early-stage companies, starting and building from scratch,” he said. “If I wanted to launch a company by myself, this was the time, and I felt that the stars lined up.”
Vaddi said that Prelude has been overjoyed to share its success with the Delaware community, which he credits with fostering the only 4-year-old company to where it is today. The University of Delaware aided its start through lab space at the STAR Campus and supplying an ample workforce of researchers. The state of Delaware has twice supported the company with job-growth incentive packages and its federal delegation and Delaware Bioscience Association has highlighted its work to a broader audience.
Vaddi, who began his career at DuPont’s now-defunct pharmaceutical division as a postdoctoral fellow, said that he recalls sitting with that company’s heir Ben DuPont at his office in the I.M. Pei Building in downtown Wilmington to conceptualize and launch Prelude.
“It’s a true Delaware story, there’s no two ways about it,” he said.
