Prelude Therapeutics closes $158M IPO as share value surges
WILMINGTON – After weeks of waiting and behind-the-scenes negotiating, Prelude Therapeutics closed its initial public offering Thursday night at its highest targeted price point of $19 a share, resulting in $158.2 million in proceeds.
Prelude, a biotechnology company headquartered at the Delaware Innovation Space, increased its sales target by about 50% from its preliminary scoping earlier in the week.
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.
“Prelude Therapeutics is honored to celebrate the announcement of its Initial Public Offering, and we are grateful to our team and our shareholders, who believe in our mission and support our efforts to advance the treatment of cancer through innovations in precision medicine,” Vaddi said in a statement Friday.
Prelude filed its IPO registration with the U.S. Securities and Exchange Commission on Sept. 21, reporting Morgan Stanley, Goldman Sachs, and Bank of America Securities as the joint bookrunners. It offered more than 8.3 million shares at a price between $17 and $19 a share and was able to close the higher end of its range.
The stock, now using the symbol “PRLD” on the Nasdaq Global Market, surged in trading Friday by nearly 40%. It closed the day at $26.20 a share. It is now the ninth most valuable stock headquartered in Delaware, trading higher on a per share value than WSFS Bank, Chemours, Sallie Mae, and more.
Like most IPOs, Prelude reported that it has yet to turn a profit and had a net loss of $27.6 million in 2019. It has been successful in obtaining $140 million in three rounds of private funding, most recently closing $50 million in investment led by New York-based OrbiMed Advisors LLC and Boston-based Fidelity Management & Research Company LLC.
The company’s majority shareholders are OrbiMed Private Investments and Baker Brother Entities, both of which own a 37% stake valued at $188.1 million via the IPO pricing, while Vaddi owns 12.4% of the company, now worth $62.7 million at IPO.
The company has several clinical trials underway focused on using small molecule inhibitors as a cancer therapy.Two in progress deal with solid tumors, including of the brain, and Prelude is initiating a third clinical trial dealing with certain cancers of the blood, bone marrow, or lymph nodes.
Funding from the IPO will allow Prelude to finish Phase 1 clinical trials and start Phase 2 for its two solid tumor drugs, although concluding Phase 2 would require additional funding, officials reported. The IPO proceeds would also allow it to finish Phase 1 trials of its third drug. Overall, the offering will fund the company’s operations through the third quarter of 2021, according to the SEC filing.
Prelude 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, it received a $474,000 grant to add positions and relocate from the STAR Campus in Newark. Last year, it received a $834,090 grant to add 49 positions by 2022 and invest $5 million into expanded lab and office space in the Wilmington area.
The company is outgrowing its current locations, split between the Delaware Innovation Space located on the site of the former DuPont Experimental Station in Alapocas as well as nearby overflow office space. Prelude reported that its leases for that space will expire next year. According to the SEC filing, Prelude currently has 51 employees although the company was to expand to 81 employees by 2022 under the terms of the state grant.
The filing represents a win for the state, however, as despite its reputation for incorporating two-thirds of all Fortune 500 companies, few have a physical presence here. Among Delaware’s most successful companies, even fewer have made the jump onto the stock market with only 13 currently listed. Those companies are largely decades- or centuries-old stalwarts or spinoffs from them, such as Chemours and Corteva from DuPont and Navient from Sallie Mae.
By Jacob Owens