WILMINGTON – Cancer research company Prelude Therapeutics recently secured $5.5 million in state taxpayer-backed grants to move to new, larger labs and more than double its workforce in the state.
The recent infusion of state dollars, the third time that Delaware has doled out public funds to support the growth of the company, came just before the publicly traded company fell into its most difficult stretch yet as investor confidence waned, and its stock price dove to new lows.
Led by Kris 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. It launched a successful initial public offering (IPO) in September 2020 and at one point held a market cap of more than $2 billion.
At a Sept. 27 meeting of the state’s incentive investment board, the Council on Development Finance, Prelude was unanimously approved for a $2.4 million lab space grant to fit-out around 48,000 square feet of leased research and development labs at DuPont’s Experimental Station in Alapocas. Its lease at smaller Delaware Innovation Space labs on the same campus expires this year.
Prelude also received more than $3.1 million in a job performance grant from the Strategic Fund to hire 121 new employees in the next three years, more than doubling its current workforce of 104.
“Prelude is proud to call Delaware home and we look forward to many years of growth and success here in the future,” Vaddi said in a statement when asked about the latest grants.
The biopharma firm has become a bit of a Delaware darling, as the rapidly expanding company has been backed twice by the state’s taxpayer-backed Strategic Fund. In 2017, Prelude received a $474,000 grant to add positions and relocate from the STAR Campus in Newark. In 2019, it received a $834,000 grant to add 49 positions by 2022 and invest $5 million into expanded lab and office space in the Wilmington area.
Prelude would be at least the fourth company to take advantage of the newly developed graduate lab space grant program that was sought by the state’s economic development agency, Delaware Prosperity Partnership. The program was bolstered by a $10 million allocation in the state’s fiscal year 2022 budget.
The eligibility factors for lab space grants are more stringent than other state programs, with DPP having hired a consultant to review proposed plans and determine whether a company has all the necessary licenses and intellectual property protections to manufacture into the future. Applicants’ prior funding track record and future plans will also be considered as well.
The grants are limited to a third of a lab fit-out cost, capped at $50 per square foot and limited to fit-outs up to 20,000 square feet – meaning that Prelude will receive the maximum grant possible. Companies that receive grants agree to remain in the space for five years while a landlord agrees to keep the lab space intact for at least six months should the applicant leave within that period.
“As you can see … Prelude is at a crucial growth point that will continue to strengthen the Delaware innovation ecosystem through R&D investment, intellectual property growth, partnership opportunities, and high‐quality job growth,” wrote Noah Olson, DPP’s acting director of innovation, in a letter to the CDF accompanying Prelude’s application that Delaware Business Times obtained through a Freedom of Information Act request.
“DPP believes this project is a great application for the program because the management team is sound; the product and market segment meet the goals and requirements of the program; intellectual property and freedom to operate appear unencumbered; and financial positions as a publicly traded company appear solid,” Olson added.
That position, while strong from a balance sheet perspective where it held $343 million in cash and equivalents at the end of the second quarter and estimated a cash flow runway into mid-2023, was shaken a bit in October. Prelude’s stock price, which touched a 52-week high of more than $95 per share in February, has since steadily retreated through 2021.
On Oct. 7, it dropped nearly 40% in one day after Prelude released some of its first drug trial results at a clinical conference. It has since traded steadily below its $19 IPO price from a year ago.
The data showed that Prelude’s drugs were safe and featured some positive signs of reaction in lymphoma and ovarian cancer patients but lacked banner headline breakthroughs. Four adenoid cystic carcinoma and one uveal melanoma patients showed no significant increase or decrease in tumor size after six months.
The trials are still very early, however, leading some investment fund managers to see potential investment upside. Morgan Stanley and Barclays both upgraded their assessments in recent days, albeit with price targets of $35 and $33 down from $60 and $80, respectively. HC Wainwright reasserted its support as well.
Five days after the data release and corresponding stock plummet, Prelude announced a research collaboration with Darwin Health, a Columbia University-linked company with technology that can help biotech firms pinpoint protein biomarkers for targeting with their drugs. Darwin Health will use its technology to advance Prelude’s work in hematologic and solid tumors.
