Prelude Therapeutics sets IPO higher at $150M
WILMINGTON – Prelude Therapeutics, a private biotechnology startup company headquartered at the Delaware Innovation Space, has set its sights on a $150 million initial public offering (IPO), increasing the sale by about 50% from its preliminary scoping.
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.
A notable success in the Delaware market with small molecule therapy is Jakafi, Incyte’s drug to treat rare types of blood and bone marrow cancer that has garnered annual sales of more than $1 billion since being approved by the U.S. Food and Drug Administration about a decade ago. Vaddi initiated the Incyte research programs that led to the discovery of Jakafi.
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 will offer more than 8.3 million shares at a price between $17 and $19 a share, with a midpoint $18 a share price producing a yield of $149.85 million. Prelude’s enterprise value would be about $684.6 million following a successful IPO.
The stock will be priced at the close of market on Thursday, Sept. 24, and will thereafter use the common stock symbol “PRLD” on the Nasdaq Global Market.
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 move to an IPO will open investments to the general public as Prelude seeks to cash in on a period of explosive growth for the health care industry. Investors who are likely reading COVID-19-related updates daily are now finding more life sciences companies to invest capital.
“The solid tumor market is expected to grow at a very high rate in the coming years, no doubt due in part to the aging global population base seeing a higher incidence rate as their immune systems achieve reduced effectiveness at keeping cancers at bay,” IPO analyst Donovan Jones wrote Sept. 21 regarding Prelude’s offering. “While the IPO isn’t cheap, the firm’s promising early results make it worth considering for long-term life science investors.”
The company has several clinical trials underway focused on using small molecule inhibitors as a cancer therapy. It currently has two clinical trials in progress dealing with solid tumors, including of the brain, and is initiating a third clinical trial dealing with certain cancers of the blood, bone marrow, or lymph nodes.
Funding from the IPO would 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.
Earlier this month, Prelude declined to comment on its IPO filing before its closing.
By Jacob Owens