Prelude Therapeutics Incorporated (PRLD) Earnings Call Transcript & Summary

Delaware for Tuesday, February 13. I'm Peter MacArthur. You may or may not have heard of Prelude Therapeutics, but they are doing extremely important work here in the first day, delivering precision medicines to patients with cancer. Yes, that is a broad definition of what it is they do. So to help us hone more about how they go about their business. We're joined by the Chief Executive Officer of Prelude Therapeutics, Kris Vaddi this morning. Kris, first of all, thanks for joining us. Appreciate the time.

Great. Great. Thank you for having me on your show.

Absolutely. Glad to have you. Prelude was founded in 2016, and there's a real Delaware story at work here. But also there is the energy of a start-up, I know that was important to you, but also you wanted to be able to develop cancer medicines that really made an impact.

I was at Incyte. I was one of the founding guy at Incyte. And we built that company pretty much from ground-up in Delaware, even though the company existed in a different form, like a genomics company in California. So that happened in 2001, and I was there for about 14 years. And during that time, it's been really exciting, where we started the research in multiple therapeutic areas, not only cancer and developed a number of very important medicines that are making a big impact in a number of diseases, including cancer. After really working on the very important medicine called Jakafi, from the idea, all the way to registration and commercialization of that product and seeing the success of the product and more importantly, inspired by the impact that medicine was making on patients with a very rare but devastating blood cancer called myelofibrosis. I felt that it's time for me to start over and focus entirely on cancer and try and develop novel medicines that can really make an impact on the lives and give hope to patients with cancer. So that was the idea with which we've actually founded the company in 2016 and started on that mission.

Kris, was that a difficult decision to reach to strike out on your own per se, you're doing very important things at Incyte. And there's obviously a leap of faith, a lot of people would think and what you decided to do.

Yes, it was not really a difficult decision because of a couple of reasons. When I reflected on my 14 or 15 years at Incyte, the times that I really enjoyed and felt that I was really contributing and playing a big role was the first, I would say, 6 to 7 years are really building the company and then starting the new projects. So that's the part that I really enjoyed. So I wanted to go back to it. And so that gave an opportunity to -- starting to give an opportunity for me to be able to do that. And also, the Delaware ecosystem for new companies and support from the state, I had some of the conversations made that decision relatively easy to make. I wanted to remain in the state. I wanted to look for some space and restart and everything came together very nicely in 2016, and that led to founding and launching Prelude.

Yes. I think you have an interesting space story, and I want to get to that in just a couple, but since you brought up Delaware as a place to do business, Kris, did the geography -- did the Delaware way really help in getting your new venture up and running? Do you think that in other states, maybe bigger states, you might not have had such a successful launch or that Delaware had a real comfort zone and the cohesion that helped you get started the right way?

I would say -- but before I get into details at Delaware, if you just look around in the country where a lot of the biotech formation and concentration is happening is really in Boston area where because it's a lot of university and history of very successful companies like Biogen, Amgen, Genzyme, et cetera, or in the Bay Area, right? And other areas are beginning to emerge like Southern California, Philadelphia area, because of University of Pennsylvania and a lot of very successful cell-based therapies that are creating a platform for new companies. But for us, the real goal is to leverage the expertise that we have, which was namely small molecule chemistry cancer biology and start building a company. And Delaware was really an area for the first -- first of all, like you said, it's a comfort zone. I've been in this area for over 2 decades. So I know the area quite well. I know the players very well. But more importantly, there's a tremendous amount of talent around this area, the tri-state area that I thought that we could take advantage of it but not have to compete with all these companies that are being founded on a daily basis in these big biotech hubs. So I was not ready to jump into that. I actually thought that we have an opportunity to be able to show to the world that in Delaware, we have not only great talent, great University, University of Delaware and access to all the key ingredients that we need to build a company in Delaware and Incyte really was a validation of that right? Without that, I think it would be hard to make that case. But that helped a lot.

Sure. The spaces you've worked in very interesting leading up to where you are, your new headquarters in Chestnut Run. It seems like you were very kind of careful to pick out locations that could kind of maybe evolve or fit your needs at any given time, and now you're in brand-new space. How is that going?

It's great. We're really excited to be able to have a wonderful working environment and very inviting space and incredible labs and offices, and it was a result of truly a number of people and organizations coming together that made that happen and we're very grateful. Delaware Prosperity Partnership and the state of Delaware, the Senator Carper and Coons, they all played a really important role in Newcastle County, Governor really gave us great support to get into this space. But to your question of how this happened, I mean, it's really very, very interesting and everything happened in a very timely manner. When the idea came of starting something at the STAR Campus, Delaware Technology park, Delaware Bio were actually looking to create an incubator space, and we had the opportunity to work closely with them to really design that space that would not only help Prelude to launch, but also how it could help other companies like us to launch.

Yes, right. Very interesting.

Yes, right amount of space. And then moving to Delaware Innovation Space at the experimental stage, again, Bill Provine and his team were really helpful and the grants syndicate were helpful as well for us to be able to access that space. So it all worked seamlessly almost. But behind the scenes, there's tremendous amount of work that was done by our team, shoulder-to-shoulder with the government and all the other organizations like Delaware...

Kris Vaddi is joining us. He is the CEO of Prelude Therapeutics. And I definitely want to spend some time talking about what it is you do, Kris. What kinds of new cancer treatments are you in the process of developing it? And also what kind of dictates the focus of your work there? Is it about getting funding for efforts? Or how do you decide, here's what we're going to do next?

Yes. It's a great question. So we all know that cancers, the current treatments for cancers are not adequate, right? So either patients respond, but very quickly breakthrough and the treatments fail or they don't respond at all. And that makes this really a big -- one of the biggest challenges that are facing patients. So our mission broadly is to discover, develop and commercialize medicines that are safer and more effective than what options that they have today. And the way we do that is we have built a great team of medicinal chemists who can actually design these molecules. And cancer biologists who can guide them in terms of which pathways, which mechanisms are causing these cancers to not respond or fail and a great team of clinicians who can actually take these molecules into the clinic and recruit the right patients and determine if these medicines are able to provide them meaningful benefit, right? So in general, that's how the process works. But the exciting part is that we made tremendous amount of advance in our understanding of cancer, we know now much more than the other did, what types of -- within the cancer cells what types of pathway if we hit based on the genomic research, based on the cellular research, molecular research that we could make a difference. The challenge is always building those molecules, finding the right ways to deliver that to the patients. That's where a lot of experience that we've had over the years. Every single member of my management team has been involved in building really important medicines and getting them to the patients. So the team is a key factor, and they all collectively look at the most challenging cancers and we prioritize them, those that are most in need and look at what are the possible intervention points in those cancers and start building. For example, we know that lung cancer is still despite all the advances, almost half of the patients with lung cancer really don't have medicines, so they still get chemotherapy or some other therapies, so our initial focus is really building a novel precision medicine for those -- precision medicine meaning these are the patients we can select and give them a drug that is potentially safer and more effective. That's what we're multi focused on right now.

Kris, let me ask you this, for those of us outside of R&D kind of looking in, it sounds like that at least in some cases, the pitfalls and the failures you might run up against can actually be catalyst to some of the biggest advances you might find down the road that those road blocks really can present opportunities and breakthroughs in what it is you do. Is that accurate? Does that happen?

Oh, yes, without a doubt. It's -- because cancer cells are always changing, evolving, mutating, figuring out how to evade the current treatment. Both positive and negative data is very meaningful to ultimately zero in on the areas where we can actually make a positive impact, right? Because along any mechanism, any pathway that we can hit, there will be points of intervention that sound very interesting scientifically. But when you really go into the real world, that's how you learned whether there are other compensatory pathways that are more important. So it's really, truly a trial and error that you have to go through, which is unfortunate because it is really -- is what's taking so long for us to see and make an impact. What gives us hope though is that there are cancers in which you do find those intervention points and you develop drugs like Jakafi, they can make a tremendous impact on patients. So that's what gives us the hope that -- and sort of a road map to follow.

Yes. Kris, I need to ask you this before I let you go. We mentioned you're in new headquarters in Chestnut Run Innovation and Science Park. Is there room to grow there? And I guess that leads me to this. What's the -- let's say, what's the 5-year plan at Prelude Therapeutics? Is bigger, better? Do you have to be careful about growth? What's your stance on that?

Yes. So to start with, the space is tremendous for us, as I mentioned earlier. It really is the perfect platform. We have over 50,000 or 60,000 square feet of lab space and 100,000 square feet of building space that MRA has done a phenomenal job of creating for us. And we have a lot of room to grow. The plan really is to stay in this sweet spot that we're in right now between 100 and 150 employees. And that's the right number for this stage of the company and advance some of the novel drugs that we're discovering in the labs, into the clinical trial can demonstrate that they actually are providing meaningful therapy to patients. And use that as a launching pad to further grow. And the Park is amazing. So the plan for the Park really are going to be really important to not only help Prelude grow, but bring other key players in the Delaware ecosystem into the space that we can all grow together...

There's almost a pay it forward or pay it sideways element to this, which is a beautiful thing, frankly, that with the work you do can actually foster growth and enterprise and other areas that aren't necessarily affiliated. Well, a lot of this you do it all, except for the innovation aspect. So it's a wonderful thing. Kris Vaddi is Chief Executive Officer of Prelude Therapeutics. If you've been listening and want to learn more about Prelude Therapeutics, I think an excellent idea, go to their website. It's preludetx.com, I'm on there now, and it's just a wonderful sight to see because of all the important work you're doing. And Kris, congratulations on -- I guess, we're looking at 8 years now of this venture and best of luck down the road as well. It was great speaking with you.

Thank you, Peter. I really appreciate the opportunity to participate on your show and look forward to reporting back again in a few years with all the progress we make.

Yes. I'll put you on the calendar. Thanks so much.