FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 2 Condensed Consolidated Balance Sheets See the accompanying notes to these unaudited condensed consolidated financial statements. See the accompanying notes to these unaudited condensed consolidated financial statements. (In thousands) (Unaudited) 1. ORGANIZATION AND BASIS OF PRESENTATION Unaudited Interim Financial Information ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE AC ...

SAFE HARBOR STATEMENT CRINETICS PHARMACEUTICALS | 2 First Phase 3 readout expected in 2023 Clinical POC in highly prevalent indications Multiple programs in late clinical development De-risk and Accelerate Time to POC with Crinetics' Endocrine GPCR Discovery and Development Engine CRINETICS PHARMACEUTICALS | 4 • Understanding the biology and medicine is key • Every GPCR is different • Every assay cascade is different • No one technique will solve every challenge • No checklist can capture what makes a compo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38583 Crinetics Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 26-3744114 (State or other juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share CRNX Nasdaq Global Select Market FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share CRNX Nasdaq Global Select Market FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commi ...

[PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures about market risk and controls [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show a decrease in total assets and stockholders' equity from December 2021 to March 2022, with increased liabilities | Metric (in thousands) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Total Assets | $333,286 | $351,015 | | Total Liabilities | $30,242 | $19,071 | | Total Stockholders' Equity | $303,044 | $331,944 | | Cash and cash equivalents | $145,548 | $200,695 | | Investment securities | $174,177 | $133,012 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2022, the company reported new license revenues but significantly increased R&D and G&A expenses, leading to a higher net and comprehensive loss | Metric (in thousands, except per share data) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | | License revenues | $3,131 | $0 | | Research and development | $28,252 | $17,584 | | General and administrative | $8,706 | $5,334 | | Net loss | $(34,627) | $(22,901) | | Net loss per share - basic and diluted | $(0.73) | $(0.69) | | Comprehensive loss | $(36,437) | $(22,907) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from January to March 2022, primarily due to net and comprehensive loss, partially offset by stock-based compensation and option exercises | Metric (in thousands) | Balance at January 1, 2022 | Balance at March 31, 2022 | | :-------------------- | :------------------------- | :------------------------ | | Total Stockholders' Equity | $331,944 | $303,044 | | Net loss | | $(34,627) | | Stock-based compensation | | $5,755 | | Exercise of stock options | | $1,780 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 cash flows show a $55.1 million net outflow, driven by investing activities and operating losses, despite reduced operating cash usage | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(13,543) | $(20,067) | | Net cash (used in) provided by investing activities | $(43,384) | $32,502 | | Net cash provided by financing activities | $1,780 | $57 | | Net change in cash, cash equivalents and restricted cash | $(55,147) | $12,492 | | Cash, cash equivalents and restricted cash at end of period | $146,048 | $106,079 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's business, accounting policies, financial instrument valuations, lease commitments, and equity transactions [1. ORGANIZATION AND BASIS OF PRESENTATION](index=7&type=section&id=1.%20ORGANIZATION%20AND%20BASIS%20OF%20PRESENTATION) This section describes Crinetics Pharmaceuticals as a clinical-stage company, detailing its business, liquidity, and potential COVID-19 impacts, operating as a single segment [Description of Business](index=7&type=section&id=Description%20of%20Business) Crinetics Pharmaceuticals is a clinical-stage company developing novel therapeutics for rare endocrine diseases and tumors, with an Australian subsidiary for preclinical and clinical work - Crinetics Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company focused on the discovery, development, and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors[25](index=25&type=chunk) - The company established a wholly-owned Australian subsidiary, Crinetics Australia Pty Ltd (CAPL), in January 2017 to conduct various preclinical and clinical activities[25](index=25&type=chunk) [Unaudited Interim Financial Information](index=7&type=section&id=Unaudited%20Interim%20Financial%20Information) Interim condensed consolidated financial statements are unaudited, prepared consistently with audited statements, and not necessarily indicative of full fiscal year results - The interim condensed consolidated financial statements are unaudited but prepared on the same basis as the audited consolidated financial statements[26](index=26&type=chunk) - The results for the three months ended March 31, 2022, are not necessarily indicative of the results expected for the full fiscal year or any other interim period[26](index=26&type=chunk) [Principles of Consolidation and Foreign Currency Transactions](index=7&type=section&id=Principles%20of%20Consolidation%20and%20Foreign%20Currency%20Transactions) Consolidated financial statements include the Company and its Australian subsidiary, with intercompany eliminations, using the U.S. dollar as functional currency, and immaterial foreign currency impacts - The condensed consolidated financial statements include the accounts of Crinetics Pharmaceuticals, Inc. and Crinetics Australia Pty Ltd (CAPL)[27](index=27&type=chunk) - The functional currency of both the Company and CAPL is the U.S. dollar[27](index=27&type=chunk) - Net realized and unrealized gains and losses from foreign currency transactions and remeasurement were not material for all periods presented[27](index=27&type=chunk) [Segment Reporting](index=7&type=section&id=Segment%20Reporting) The Company operates and manages its business as a single operating segment - The Company views its operations and manages its business in one operating segment[28](index=28&type=chunk) [Liquidity](index=7&type=section&id=Liquidity) Despite a **$309.9 million** accumulated deficit, the company's **$319.7 million** in cash and investments, plus **$117.3 million** raised in April 2022, provides liquidity for 12 months, though future capital raises are anticipated - Accumulated deficit as of March 31, 2022: **$309.9 million**[29](index=29&type=chunk) - Unrestricted cash, cash equivalents, and investment securities as of March 31, 2022: **$319.7 million**, believed to be sufficient for at least the next 12 months[29](index=29&type=chunk) - Raised an additional **$117.3 million** through an underwritten follow-on offering in April 2022[29](index=29&type=chunk) - Expects to continue to incur net losses and will need to raise substantial additional capital for its business plan over the next several years[29](index=29&type=chunk) [COVID-19](index=7&type=section&id=COVID-19) The COVID-19 pandemic has caused business disruption but no material financial effect, with the company monitoring evolving impacts on operations and clinical trials - The COVID-19 pandemic has caused significant business disruption globally[31](index=31&type=chunk) - The pandemic has not yet had a material effect on the Company's financial results[31](index=31&type=chunk) - The degree to which COVID-19 may impact future financial condition or results of operations is uncertain, including the timing and ability to complete clinical trials and raise additional capital[31](index=31&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's key accounting policies, covering estimates, investments, fair value, cash, derivatives, credit risk, leases, revenue, R&D, tax incentives, stock compensation, and recent pronouncements [Use of Estimates](index=8&type=section&id=Use%20of%20Estimates) Financial statement preparation requires management estimates and assumptions for R&D, stock awards, financial instrument fair values, revenue, and equity investments, where actual results may differ - Significant estimates relate to accrual of research and development expenses, valuation of stock-based awards, fair values of financial instruments, revenue recognition, and equity method investment[32](index=32&type=chunk) - Actual results may ultimately materially differ from these estimates and assumptions[32](index=32&type=chunk) [Equity Method Investment](index=8&type=section&id=Equity%20Method%20Investment) The company accounts for its Radionetics investment using the equity method due to significant influence over the VIE, writing it down to zero by March 2022 due to shared losses - Radionetics Oncology, Inc. is considered a Variable Interest Entity (VIE)[35](index=35&type=chunk) - The Company accounts for its investment in Radionetics under the equity method of accounting due to its ability to exercise significant influence[35](index=35&type=chunk) - The Company's equity method investment in Radionetics was written down to zero as of March 31, 2022, as a result of the allocation of the Company's share of losses[35](index=35&type=chunk) [Fair Value Measurements](index=8&type=section&id=Fair%20Value%20Measurements) Fair value, defined as an exit price, is measured using a three-tier hierarchy (Level 1, 2, 3), with derivative assets and investment securities recorded at fair value - Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants[36](index=36&type=chunk) - Fair value hierarchy: Level 1 (observable inputs such as quoted prices in active markets), Level 2 (observable inputs other than quoted prices), Level 3 (unobservable inputs)[36](index=36&type=chunk)[38](index=38&type=chunk) - The Company recorded the derivative asset and investment securities at fair value[38](index=38&type=chunk) [Cash, Cash Equivalents and Restricted Cash](index=9&type=section&id=Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) Cash and cash equivalents include liquid accounts and short-term debt, while restricted cash serves as long-term collateral for the facility lease - Cash and cash equivalents include cash held in readily available checking and money market accounts, as well as short-term debt securities with maturities of three months or less when purchased[39](index=39&type=chunk) - Restricted cash represents cash held as collateral for the Company's facility lease and is reported as a long-term asset[39](index=39&type=chunk) [Investment Securities](index=9&type=section&id=Investment%20Securities) All available-for-sale investments are carried at fair value, with temporary unrealized gains/losses in OCI, and no impairment recognized as losses were not other-than-temporary - All investments have been classified as "available-for-sale" and are carried at fair value[40](index=40&type=chunk) - Unrealized gains and losses that are determined to be temporary in nature are reported as a component of accumulated other comprehensive income (loss)[40](index=40&type=chunk) - The Company determined that its unrealized losses were not considered to be other-than-temporary as of March 31, 2022, and December 31, 2021[60](index=60&type=chunk) [Derivative Asset](index=9&type=section&id=Derivative%20Asset) The Radionetics Warrant, a single derivative, is recorded as a long-term asset at fair value, with changes recognized in other income (expense) - The Company has a single derivative instrument, a warrant ("Radionetics Warrant") received on October 15, 2021[41](index=41&type=chunk) - The Radionetics Warrant is recorded as long-term on the balance sheets due to lack of marketability[41](index=41&type=chunk) - Changes in fair value of the Radionetics Warrant are recognized in other income (expense)[41](index=41&type=chunk) [Concentrations of Credit Risk](index=9&type=section&id=Concentrations%20of%20Credit%20Risk) The company's financial instruments are subject to credit risk, but it mitigates significant exposure through federally insured deposits and strict investment guidelines - Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and investment securities[42](index=42&type=chunk) - The Company believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution and established guidelines for investments[42](index=42&type=chunk) [Leases](index=9&type=section&id=Leases) Operating leases over 12 months are recognized as ROU assets and liabilities, with straight-line expense recognition using an incremental borrowing rate if no implicit rate exists - Leases with a term longer than 12 months that are determined to be operating leases are included in operating lease right-of-use assets and liabilities[43](index=43&type=chunk) - Lease expense for lease payments is recognized on a straight-line basis over the lease term[43](index=43&type=chunk) - An incremental borrowing rate is used based on information available at commencement dates in determining the present value of lease payments when the Company's leases do not provide an implicit rate[43](index=43&type=chunk) [Revenue Recognition](index=9&type=section&id=Revenue%20Recognition) Revenue from licensing is recognized when goods/services are transferred, following a five-step model, with variable consideration estimated and included if a significant reversal is improbable - The Company recognizes revenues when, or as, the promised goods or services are transferred to customers in an amount that reflects the consideration to which it expects to be entitled[44](index=44&type=chunk) - Revenue recognition follows a five-step model: identify contract, identify performance obligation(s), determine transaction price, allocate transaction price, and recognize revenue when performance obligation(s) are satisfied[45](index=45&type=chunk) - Variable consideration, such as milestone payments, is estimated using the most likely method and included in the transaction price if it is probable that a significant revenue reversal will not occur[45](index=45&type=chunk) - For licenses that are distinct performance obligations, revenue from non-refundable, up-front fees is recognized at the point in time when the license is transferred[45](index=45&type=chunk) - For performance obligations satisfied over time, the cost-to-cost measure of progress is used to recognize revenue[45](index=45&type=chunk) [Research and Development Expenses](index=10&type=section&id=Research%20and%20Development%20Expenses) R&D expenses, including personnel, third-party costs, and supplies, are expensed as incurred, with clinical trial accruals based on service provider estimates - R&D expenses consist primarily of salaries, payroll taxes, employee benefits, stock-based compensation, consulting expenses, third-party R&D expenses, laboratory supplies, clinical materials, and overhead[46](index=46&type=chunk) - R&D expenses are charged to expense as incurred[46](index=46&type=chunk) - Expenses related to clinical trials are accrued based on estimates and/or representations from service providers regarding work performed[48](index=48&type=chunk) [Australian Tax Incentive](index=11&type=section&id=Australian%20Tax%20Incentive) CAPL is eligible for a cash refund from the Australian Taxation Office for R&D expenditures, recognized as an R&D expense reduction when receipt is assured and measurable - CAPL is eligible to obtain a cash refund from the Australian Taxation Office for eligible R&D expenditures under the Australian R&D Tax Incentive Program[49](index=49&type=chunk) - The Australian Tax Incentive is recognized as a reduction to R&D expense when there is reasonable assurance that it will be received, the expenditure incurred, and the amount reliably measured[49](index=49&type=chunk) | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Reduction to R&D expense | $146 | $55 | [Stock-Based Compensation](index=11&type=section&id=Stock-Based%20Compensation) Stock-based compensation expense, representing the estimated grant date fair value of equity awards, is recognized straight-line over the vesting period, using Black-Scholes for options - Stock-based compensation expense represents the estimated grant date fair value of equity awards (stock options, restricted stock units, ESPP shares)[50](index=50&type=chunk) - Expense is recognized over the requisite service period (usually vesting period) on a straight-line basis[50](index=50&type=chunk) - Stock option grants are valued using the Black-Scholes option pricing model, and restricted stock units are valued using the grant date stock price[50](index=50&type=chunk) [Comprehensive Loss](index=11&type=section&id=Comprehensive%20Loss) Comprehensive loss includes the company's net loss and unrealized gains or losses on investment securities for all periods presented - Comprehensive loss is comprised of the Company's net loss and the unrealized gain or loss on the Company's investment securities[51](index=51&type=chunk) [Net Loss Per Share](index=11&type=section&id=Net%20Loss%20Per%20Share) Basic net loss per share is calculated by net loss divided by weighted-average shares, with diluted loss per share being identical due to anti-dilutive securities - Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding[52](index=52&type=chunk) - For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be anti-dilutive[52](index=52&type=chunk) | Potentially Dilutive Securities (in thousands) | 2022 | 2021 | | :--------------------------------------------- | :--- | :--- | | Common stock awards | 8,279 | 5,996 | | Unvested common stock subject to repurchase | — | 12 | | Total | 8,279 | 6,008 | [Recently Adopted Accounting Pronouncements](index=11&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) The company adopted ASU 2021-04 on January 1, 2022, clarifying accounting for equity-classified call options, with no impact on financial statements - The Company adopted ASU 2021-04 as of January 1, 2022[56](index=56&type=chunk) - ASU 2021-04 clarifies and reduces diversity in an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options[53](index=53&type=chunk) - The adoption did not have an impact on its condensed consolidated financial statements[56](index=56&type=chunk) [Recent Accounting Pronouncements](index=12&type=section&id=Recent%20Accounting%20Pronouncements) The company is evaluating ASU 2016-13, effective after December 15, 2022, which amends guidance on reporting credit losses for financial instruments - ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326)" is effective for the Company for fiscal years beginning after December 15, 2022[57](index=57&type=chunk) - The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements[57](index=57&type=chunk) [3. INVESTMENT SECURITIES](index=12&type=section&id=3.%20INVESTMENT%20SECURITIES) Available-for-sale investment securities increased in fair value from December 2021 to March 2022, primarily in government and corporate debt, with unrealized losses deemed temporary | Available-for-sale investment securities (Fair Market Value, in thousands) | March 31, 2022 | December 31, 2021 | | :----------------------------------------------------------------------- | :------------- | :---------------- | | U.S. government and agency obligations | $98,124 | $54,457 | | Certificates of deposit | $4,465 | $5,732 | | Corporate debt securities | $69,183 | $70,402 | | Asset-backed securities | $2,405 | $2,421 | | **Total** | **$174,177** | **$133,012** | | Due in one year or less | $89,810 | $31,078 | | Due after one year through five years | $84,367 | $101,934 | - The Company reviewed its investment holdings and determined that its unrealized losses were not considered to be other-than-temporary as of March 31, 2022, and December 31, 2021[60](index=60&type=chunk) [4. FAIR VALUE MEASUREMENTS](index=13&type=section&id=4.%20FAIR%20VALUE%20MEASUREMENTS) This section details fair value measurements for investment securities (Level 1/2) and the Radionetics Warrant (Level 3), with no inter-level transfers during the periods - Investment securities are valued based on quoted market prices (Level 1) or valuation models using observable inputs (Level 2)[61](index=61&type=chunk)[62](index=62&type=chunk) - The Radionetics Warrant is valued using unobservable inputs (Level 3) due to little to no market data[62](index=62&type=chunk) | Financial assets measured at fair value (in thousands) | March 31, 2022 | December 31, 2021 | | :----------------------------------------------------- | :------------- | :---------------- | | **Investment securities:** | | | | Level 1 | $86,840 | $44,984 | | Level 2 | $87,337 | $88,028 | | Level 3 | $0 | $0 | | **Derivative Assets:** | | | | Radionetics Warrant (Level 3) | $68 | $68 | | **Total assets measured at fair value** | **$174,245** | **$133,080** | - There were no transfers into or out of Level 3 during the three months ended March 31, 2022, or year ended December 31, 2021[62](index=62&type=chunk) [5. BALANCE SHEET DETAILS](index=14&type=section&id=5.%20BALANCE%20SHEET%20DETAILS) Prepaid expenses and other current assets decreased from December 2021 to March 2022, mainly due to lower prepaid R&D and tax incentive receivables, with a slight decrease in net property and equipment | Prepaid expenses and other current assets (in thousands) | March 31, 2022 | December 31, 2021 | | :------------------------------------------------------- | :------------- | :---------------- | | Prepaid research and development costs | $4,843 | $7,184 | | Australian tax incentive receivable | $410 | $977 | | Due from Radionetics | $619 | $553 | | Other | $1,617 | $912 | | **Total** | **$8,524** | **$11,013** | | Property and equipment, net (in thousands) | March 31, 2022 | December 31, 2021 | | :----------------------------------------- | :------------- | :---------------- | | Total property and equipment at cost | $6,393 | $6,305 | | Less: accumulated depreciation and amortization | $3,721 | $3,480 | | **Net** | **$2,672** | **$2,825** | [6. OPERATING LEASE](index=14&type=section&id=6.%20OPERATING%20LEASE) The San Diego facility's operating lease has a 3.3-year remaining term, with **$4.3 million** in future payments and **$0.3 million** rent expense for Q1 2022 and Q1 2021 - The operating lease for the San Diego facility has an initial term of seven years, expiring in August 2025[65](index=65&type=chunk) - As of March 31, 2022, the weighted average remaining term was **3.3 years**, and the weighted-average discount rate was **8%**[65](index=65&type=chunk) - Rent expense was **$0.3 million** for each of the three-month periods ended March 31, 2022, and 2021[65](index=65&type=chunk) | Future Minimum Lease Payments (in thousands) | Amount | | :------------------------------------------- | :----- | | Year ending December 31, 2022 (9 months) | $909 | | 2023 | $1,244 | | 2024 | $1,280 | | 2025 | $871 | | **Total future minimum lease payments** | **$4,304** | [7. COMMITMENTS AND CONTINGENCIES](index=15&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) The company may face ordinary course claims but does not anticipate a material adverse effect on its financial position or operations from their resolution [Litigation](index=15&type=section&id=Litigation) The company is not involved in material legal proceedings and expects no material adverse effect from ordinary course claims on its financial position - The Company is not currently a party to any material legal proceedings[67](index=67&type=chunk) - The Company does not expect that the resolution of ordinary course claims will have a material adverse effect on its financial position or results of operations[67](index=67&type=chunk) [8. LICENSE AGREEMENTS](index=15&type=section&id=8.%20LICENSE%20AGREEMENTS) This section details two significant license agreements: with Radionetics for radiotherapeutics and Sanwa for paltusotine in Japan, both involving upfront payments, milestones, and royalties [Radionetics Oncology, Inc.](index=15&type=section&id=Radionetics%20Oncology,%20Inc.) Crinetics co-founded Radionetics in October 2021, granting an exclusive radiotherapeutics license, receiving a majority equity stake and a **$1.1 million** warrant, with the equity investment written down to zero due to losses [Formation](index=15&type=section&id=Formation) Crinetics, 5AM Ventures, and Frazier Healthcare Partners formed Radionetics Oncology in October 2021 to develop novel radiopharmaceuticals for oncology - Radionetics Oncology, Inc. was formed in October 2021 by Crinetics, 5AM Ventures, and Frazier Healthcare Partners[68](index=68&type=chunk) - Radionetics aims to develop a deep pipeline of novel, targeted, nonpeptide radiopharmaceuticals for the treatment of a broad range of oncology indications[68](index=68&type=chunk) [Collaboration and License Agreement](index=15&type=section&id=Collaboration%20and%20License%20Agreement) Crinetics granted Radionetics an exclusive radiotherapeutics license, receiving **50.5 million** shares (a **64%** stake) and a **$1.1 million** warrant, with potential sales milestones exceeding **$1.0 billion** and single-digit royalties - Crinetics granted Radionetics an exclusive world-wide license to its radiotherapeutics technology platform and associated intellectual property[68](index=68&type=chunk) - In exchange, Crinetics received **50,500,000** shares of common stock of Radionetics (initial **64%** stake) and a warrant[68](index=68&type=chunk) - The upfront noncash considerations were valued at **$1.1 million** and recognized as license revenue in October 2021[68](index=68&type=chunk) - Crinetics may receive potential sales milestones in excess of **$1.0 billion** and single-digit royalties on net sales[68](index=68&type=chunk) [Investment in Radionetics](index=15&type=section&id=Investment%20in%20Radionetics) Crinetics accounts for its Radionetics investment using the equity method, writing down the initial **$1.0 million** to zero by March 2022 due to shared losses - The Company accounted for its investment in Radionetics under the equity method of accounting due to its ability to exercise significant influence[69](index=69&type=chunk) - The Company's initial investment in Radionetics was recorded at the fair value of common stock received in the amount of **$1.0 million**[69](index=69&type=chunk) - The Company's investment in Radionetics was written down to zero during the three months ended March 31, 2022, as a result of the allocation of the Company's share of losses[71](index=71&type=chunk) [Other Radionetics Transactions](index=16&type=section&id=Other%20Radionetics%20Transactions) Radionetics completed a **$30.0 million** convertible notes financing in 2021, with Crinetics' CEO serving as chairman, and Crinetics had **$0.6 million** due from Radionetics by March 2022 - Radionetics completed a **$30.0 million** convertible notes financing with 5AM and Frazier in 2021[71](index=71&type=chunk) - Crinetics' President and CEO serves as chairman of the Radionetics board of directors, receiving restricted common stock and an annual retainer[71](index=71&type=chunk) - As of March 31, 2022, the Company had approximately **$0.6 million** due from Radionetics for reimbursement of certain expenses[71](index=71&type=chunk) [Sanwa Kagaku Kenkyusho Co., Ltd](index=16&type=section&id=Sanwa%20Kagaku%20Kenkyusho%20Co.,%20Ltd) In February 2022, Crinetics granted Sanwa exclusive rights for paltusotine in Japan, receiving a **$13.0 million** upfront payment, recognizing **$3.1 million** in Q1 2022, with **$9.9 million** deferred, and potential future milestones up to **$25.5 million** plus royalties - On February 25, 2022, Crinetics granted Sanwa Kagaku Kenkyusho Co., Ltd. an exclusive license to develop and commercialize paltusotine in Japan[72](index=72&type=chunk) - Crinetics received a **$13.0 million** nonrefundable, upfront payment[72](index=72&type=chunk) - During the three months ended March 31, 2022, **$3.1 million** of the upfront payment was recognized as license revenues (**$1.5 million** for the license, **$1.6 million** for data exchange)[72](index=72&type=chunk) - **$9.9 million** is included as deferred revenues in the accompanying condensed consolidated balance sheets[72](index=72&type=chunk) - Crinetics will be eligible to receive up to an additional **$25.5 million** in milestone payments and certain sales-based royalties[72](index=72&type=chunk) [9. STOCKHOLDERS' EQUITY](index=16&type=section&id=9.%20STOCKHOLDERS'%20EQUITY) This section details various stock offerings and shelf registration statements, including follow-on offerings in April and October 2021, a private placement in July 2021, and an additional offering in April 2022 [Stock Offerings](index=16&type=section&id=Stock%20Offerings) The company completed several stock offerings in 2021, raising substantial capital, including a **$72.6 million** net follow-on in April, a **$15.0 million** private placement in July, and a **$162.0 million** net follow-on in October - On April 12, 2021, the Company completed an underwritten follow-on offering of **4,562,044** shares, generating approximately **$72.6 million** net proceeds[73](index=73&type=chunk) - On July 28, 2021, the Company completed a private placement of **851,306** shares, generating approximately **$15.0 million** proceeds[75](index=75&type=chunk) - On October 21, 2021, the Company completed an underwritten follow-on offering of **8,712,400** shares, generating approximately **$162.0 million** net proceeds[75](index=75&type=chunk) [Shelf Registration Statement and ATM Offerings](index=17&type=section&id=Shelf%20Registration%20Statement%20and%20ATM%20Offerings) The company has a **$300.0 million** Shelf Registration Statement and a **$75.0 million** ATM Offering, raising **$6.4 million** to date, with a new Shelf Registration filed in August 2021 - On August 13, 2019, the Company filed a Shelf Registration Statement covering the offering of up to **$300.0 million** of common stock, preferred stock, debt securities, warrants and units[76](index=76&type=chunk) - The Company may sell up to **$75.0 million** of common stock through an ATM Offering, having issued **275,764** shares for net proceeds of **$6.4 million** to date, with no additional shares issued since the first quarter of 2020[76](index=76&type=chunk) - On August 10, 2021, the Company filed a 2021 Shelf Registration Statement for the future sale of an unlimited amount of common stock and other securities[76](index=76&type=chunk) [10. EQUITY INCENTIVE PLANS](index=17&type=section&id=10.%20EQUITY%20INCENTIVE%20PLANS) This section describes the company's equity incentive plans (2021 Inducement, 2018, 2015, ESPP), detailing stock option and RSU activity, and valuation assumptions for awards [2021 Employment Inducement Incentive Award Plan](index=17&type=section&id=2021%20Employment%20Inducement%20Incentive%20Award%20Plan) The 2021 Employment Inducement Plan, adopted in December 2021, initially reserved **1.5 million** shares for new employees, with **1,083,500** shares available by March 2022 - The 2021 Employment Inducement Incentive Award Plan was adopted in December 2021[77](index=77&type=chunk) - Initially reserved **1,500,000** shares of common stock for issuance[77](index=77&type=chunk) - As of March 31, 2022, **1,083,500** shares were available for future issuance[77](index=77&type=chunk) [2018 Incentive Award Plan](index=17&type=section&id=2018%20Incentive%20Award%20Plan) The 2018 Incentive Award Plan, adopted in July 2018, grants equity awards vesting over four years, with an evergreen provision adding **2,379,911** shares on January 1, 2022, leaving **1,989,166** available by March 2022 - The 2018 Incentive Award Plan was adopted in July 2018[78](index=78&type=chunk) - Options issued under the 2018 Plan generally expire ten years from the grant date and vest over a four-year period[78](index=78&type=chunk) - Under an evergreen provision, an additional **2,379,911** shares became available for future issuance on January 1, 2022[78](index=78&type=chunk) - As of March 31, 2022, **1,989,166** shares were available for future issuance[78](index=78&type=chunk) [2015 Stock Incentive Plan](index=17&type=section&id=2015%20Stock%20Incentive%20Plan) The 2015 Stock Incentive Plan no longer issues new awards after the 2018 Plan's adoption, with no unvested shares subject to repurchase by March 2022 - Subsequent to the adoption of the 2018 Plan, no additional equity awards can be made under the 2015 Plan[79](index=79&type=chunk) - As of March 31, 2022, there were no unvested shares issued under early-exercise provisions subject to repurchase by the Company[79](index=79&type=chunk) [2018 Employee Stock Purchase Plan](index=18&type=section&id=2018%20Employee%20Stock%20Purchase%20Plan) The ESPP allows stock purchases via payroll deductions, with an evergreen provision adding **475,982** shares on January 1, 2022, leaving **1,329,090** shares available by March 2022 - The ESPP permits participants to purchase common stock through payroll deductions[81](index=81&type=chunk) - Under an evergreen provision, an additional **475,982** shares became available for future issuance on January 1, 2022[81](index=81&type=chunk) - As of March 31, 2022, an aggregate of **1,329,090** shares of common stock were available for issuance under the ESPP[81](index=81&type=chunk) [Stock Awards](index=18&type=section&id=Stock%20Awards) This section details Q1 2022 stock option and restricted stock unit activity, showing increased outstanding options and new RSU grants [Stock Options](index=18&type=section&id=Stock%20Options) Stock options outstanding reached **7,975,426** by March 2022, with a **$17.10** weighted-average exercise price and **$43.4 million** aggregate intrinsic value, while **203,047** options were exercised in Q1 2022 | Stock Option Activity | March 31, 2022 | | :-------------------- | :------------- | | Options Outstanding | 7,975,426 | | Weighted-Average Exercise Price | $17.10 |\ | Aggregate Intrinsic Value (000's) | $43,369 | - The aggregate intrinsic value of options exercised during the three months ended March 31, 2022, was **$2.2 million**[82](index=82&type=chunk) [Restricted Stock Units](index=18&type=section&id=Restricted%20Stock%20Units) The company granted **306,194** RSUs in Q1 2022, with **304,069** units outstanding at period-end, having an aggregate fair value of **$6.1 million** | Restricted Stock Unit Activity | March 31, 2022 | | :----------------------------- | :------------- | | Granted | 306,194 | | Balance at March 31, 2022 | 304,069 | | Aggregate Fair Value (000's) | $6,087 | [Fair Value of Stock Awards](index=18&type=section&id=Fair%20Value%20of%20Stock%20Awards) The weighted-average fair value of stock options awarded increased to **$14.77** per share in Q1 2022, valued using the Black-Scholes model with specific assumptions for term, volatility, and interest rate - The weighted-average fair value of stock options awarded was **$14.77** per share for the three months ended March 31, 2022, compared to **$11.01** per share for the same period in 2021[86](index=86&type=chunk) - The Black-Scholes option pricing model is used to value awards[84](index=84&type=chunk) | Stock Option Awards Assumptions | 2022 | 2021 | | :------------------------------ | :---------- | :---------- | | Expected option term | 6.0 years | 6.0 years | | Expected volatility | 88% | 87% | | Risk free interest rate | 1.8% | 0.9% | | Expected dividend yield | —% | —% | [Stock-Based Compensation Expense](index=19&type=section&id=Stock-Based%20Compensation%20Expense) Total stock-based compensation expense increased to **$5.8 million** in Q1 2022, with **$70.2 million** unrecognized as of March 2022, to be recognized over 1.4 to 4.0 years | Stock-Based Compensation Expense (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Included in research and development | $3,191 | $1,813 | | Included in general and administrative | $2,564 | $1,593 | | **Total stock-based compensation expense** | **$5,755** | **$3,406** | - As of March 31, 2022, unrecognized stock-based compensation cost related to option awards, restricted stock units, and ESPP was **$62.3 million**, **$6.0 million**, and **$1.9 million**, respectively[87](index=87&type=chunk) - These unrecognized costs are expected to be recognized over remaining weighted-average periods of approximately **2.2 years** (options), **4.0 years** (RSUs), and **1.4 years** (ESPP)[87](index=87&type=chunk) [11. SUBSEQUENT EVENT](index=19&type=section&id=11.%20SUBSEQUENT%20EVENT) On April 18, 2022, the company completed a follow-on offering of **5,625,563** shares at **$22.22** per share, generating approximately **$117.3 million** in net proceeds - On April 18, 2022, the Company completed an underwritten follow-on offering of **5,625,563** shares of its common stock[88](index=88&type=chunk) - The shares were offered at a price to the public of **$22.22** per share[88](index=88&type=chunk) - Net proceeds from the offering were approximately **$117.3 million**, after underwriting discounts and estimated offering costs[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operating results, product pipeline, and future outlook, discussing revenues, expenses, cash flows, and liquidity [Forward Looking Statements](index=20&type=section&id=Forward%20Looking%20Statements) This section contains forward-looking statements about future financial results, strategy, and development, subject to risks and uncertainties, which the company does not plan to update unless legally required - The discussion contains forward-looking statements regarding future results of operations, financial position, business strategy, prospective products, and research and development costs[91](index=91&type=chunk) - These statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A, "Risk Factors"[91](index=91&type=chunk) - The Company does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law[91](index=91&type=chunk) [Overview](index=20&type=section&id=Overview) Crinetics is a clinical-stage pharmaceutical company developing novel oral nonpeptide therapeutics for rare endocrine diseases and tumors, with a pipeline including paltusotine, CRN04777, and CRN04894 - Crinetics is a clinical-stage pharmaceutical company focused on the discovery, development, and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors[92](index=92&type=chunk) - The company has discovered a pipeline of oral nonpeptide (small molecule) new chemical entities that target peptide GPCRs[92](index=92&type=chunk) - Product candidates include paltusotine (acromegaly, NETs), CRN04777 (congenital hyperinsulinism), and CRN04894 (Cushing's Disease, congenital adrenal hyperplasia)[92](index=92&type=chunk) [Paltusotine (SST2 Agonist Program)](index=20&type=section&id=Paltusotine%20(SST2%20Agonist%20Program)) Paltusotine, the lead SST2 agonist, is in Phase 3 for acromegaly (data expected 2023) and Phase 2 for NETs, holding FDA orphan drug designation, with a Japan license signed in February 2022 - Paltusotine is the lead product candidate, an oral selective nonpeptide somatostatin receptor type 2 (SST2) agonist[93](index=93&type=chunk) - It is in Phase 3 development for acromegaly (PATHFNDR-1 and PATHFNDR-2 trials) with topline data expected in 2023, and a Phase 2 trial for NETs complicated by carcinoid syndrome[95](index=95&type=chunk) - The FDA has granted orphan drug designation for paltusotine for the treatment of acromegaly[93](index=93&type=chunk) - In February 2022, an exclusive license agreement was entered with Sanwa Kagaku Kenkyusho Co., Ltd. for paltusotine in Japan[95](index=95&type=chunk) [CRN04777 (SST5 Agonist)](index=21&type=section&id=CRN04777%20(SST5%20Agonist)) CRN04777, an oral SST5 agonist for congenital HI, showed positive Phase 1 data with potent insulin suppression and a **40-hour** half-life, with Phase 2 initiation planned for H2 2022, holding FDA and EMA orphan designations - CRN04777 is an investigational, oral, nonpeptide somatostatin receptor type 5 (SST5) agonist designed for the treatment of congenital hyperinsulinism (HI)[96](index=96&type=chunk) - Positive topline data from Phase 1 studies (SAD in Sep 2021, MAD in Mar 2022) demonstrated pharmacologic proof-of-concept with potent suppression of stimulated insulin, good absorption, and a half-life of approximately **40 hours**[96](index=96&type=chunk) - The company is preparing for regulatory interactions to discuss the design of the Phase 2 clinical study, planned for initiation in the second half of 2022[96](index=96&type=chunk) - CRN04777 has received FDA rare pediatric disease designation and EMA orphan drug designation for the treatment of congenital HI[96](index=96&type=chunk) [CRN04894 (ACTH Antagonist)](index=21&type=section&id=CRN04894%20(ACTH%20Antagonist)) CRN04894, an oral ACTH antagonist for Cushing's and CAH, showed dose-dependent cortisol reductions in Phase 1 SAD, with MAD data expected in Q2 2022 and clinical studies planned for H2 2022 - CRN04894 is an investigational, oral, nonpeptide product candidate designed to antagonize ACTH for diseases caused by excess ACTH, including Cushing's disease and congenital adrenal hyperplasia (CAH)[97](index=97&type=chunk) - Positive topline data from the SAD cohorts of the Phase 1 study (Aug 2021) demonstrated dose-dependent reductions of both basal cortisol and elevated cortisol following an ACTH challenge[99](index=99&type=chunk) - The MAD portion of the Phase 1 study is ongoing, with topline data expected in the second quarter of 2022, and plans to initiate clinical studies in the second half of 2022[99](index=99&type=chunk) [Parathyroid Hormone Antagonist](index=22&type=section&id=Parathyroid%20Hormone%20Antagonist) The company is developing oral nonpeptide PTH receptor antagonists for PHPT and HHM, with preclinical models showing activity, and is evaluating candidates for clinical trials - The company is developing antagonists of the parathyroid hormone (PTH) receptor for the treatment of primary hyperparathyroidism (PHPT) and humoral hypercalcemia of malignancy (HHM)[100](index=100&type=chunk) - Investigational, orally available nonpeptide PTH antagonists have shown activity and drug-like properties in preclinical models[100](index=100&type=chunk) [Radionetics Oncology, Inc.](index=22&type=section&id=Radionetics%20Oncology,%20Inc.) Crinetics co-founded Radionetics Oncology in October 2021, granting an exclusive radiotherapeutics license, receiving a majority equity stake, a warrant, and potential sales milestones exceeding **$1.0 billion** plus royalties - Crinetics, together with 5AM Ventures and Frazier Healthcare Partners, announced the formation of Radionetics Oncology, Inc. in October 2021[101](index=101&type=chunk) - Crinetics granted Radionetics an exclusive world-wide license to its technology for the development of radiotherapeutics and related radio-imaging agents[101](index=101&type=chunk) - In exchange, Crinetics received a majority equity stake in Radionetics, a warrant, potential sales milestones in excess of **$1.0 billion**, and single-digit royalties on net sales[101](index=101&type=chunk) [Research Discovery](index=22&type=section&id=Research%20Discovery) Crinetics continuously evaluates new therapeutic options for endocrine diseases, with all internally discovered product candidates subject to patent applications, retaining worldwide commercialization rights except for specific licenses - The company continuously evaluates where to next deploy its drug discovery efforts for other debilitating endocrine diseases[102](index=102&type=chunk) - All product candidates have been discovered, characterized, and developed internally and are the subject of composition of matter patent applications[102](index=102&type=chunk) - Crinetics has retained worldwide rights to commercialize its product candidates, other than the Sanwa License and the Radionetics License[102](index=102&type=chunk) [Australian operations](index=22&type=section&id=Australian%20operations) CAPL, a wholly-owned subsidiary, conducts preclinical and clinical activities and is eligible for a **43.5%** refundable tax credit on qualified R&D expenditures under the Australian R&D Tax Incentive Program - Crinetics Australia Pty Ltd (CAPL), a wholly-owned subsidiary, was formed to conduct various preclinical and clinical activities[103](index=103&type=chunk) - CAPL is eligible for a refundable tax credit equal to **43.5%** of qualified research and development expenditures under the Australian R&D Tax Incentive Program[103](index=103&type=chunk) - Eligibility requires the Australian subsidiary to retain rights to data and intellectual property generated in Australia, and the parent company's total revenues to be less than **$20.0 million** Australian dollars[103](index=103&type=chunk) [COVID-19](index=22&type=section&id=COVID-19) The company actively monitors COVID-19's impact on manufacturing, nonclinical activities, and clinical trials, acknowledging potential alterations to timelines and operations - The company is in close contact with principal investigators and clinical sites to assess any impacts of the ongoing COVID-19 global pandemic on drug manufacturing, nonclinical activities, and clinical trials[104](index=104&type=chunk) - The direct and indirect impacts of COVID-19 on the business could alter forecasted timelines[104](index=104&type=chunk) [Financial operations overview](index=23&type=section&id=Financial%20operations%20overview) Crinetics, funded by grants and stock sales, has an accumulated deficit of **$309.9 million** by March 2022, anticipating increased expenses and future capital needs for R&D and clinical trials - The company has funded operations primarily through grant and license revenues, private placement of preferred stock, and sales of common stock[106](index=106&type=chunk) - As of March 31, 2022, the company had an accumulated deficit of **$309.9 million** and unrestricted cash, cash equivalents, and investment securities of **$319.7 million**[106](index=106&type=chunk) - Expenses and operating losses are expected to increase substantially due to ongoing clinical trials, R&D activities, hiring additional personnel, protecting intellectual property, and public company costs[106](index=106&type=chunk) - The company expects to finance its cash needs through equity offerings, debt financings, or other sources, including potential collaborations, licenses, and similar arrangements[106](index=106&type=chunk) [Revenues](index=23&type=section&id=Revenues) All revenue to date is from grants and licenses, with deferred revenue from the Sanwa License expected, and no commercial product sales anticipated in the foreseeable future - All revenue to date has been derived from grant awards and licenses[107](index=107&type=chunk) - The company expects to recognize deferred revenue amounts from the Sanwa License as the data exchange performance obligation is fulfilled[107](index=107&type=chunk) - The company does not expect to generate revenues from the commercial sale of approved products for at least the foreseeable future[107](index=107&type=chunk) [License revenues](index=23&type=section&id=License%20revenues) License revenues in 2021 stemmed from the Radionetics equity stake, while 2022 revenues were from the Sanwa License for paltusotine in Japan - License revenues in 2021 were derived from the majority equity stake obtained in Radionetics pursuant to a Collaboration and License Agreement[107](index=107&type=chunk) - License revenues for 2022 were derived from the Sanwa License, granting the exclusive right to develop and commercialize paltusotine in Japan[107](index=107&type=chunk) [Research and development](index=23&type=section&id=Research%20and%20development) R&D expenses, including personnel, CROs, and manufacturing, are expensed as incurred and offset by the Australian Tax Incentive, with substantial increases anticipated due to development uncertainties - Research and development expenses primarily relate to discovery efforts and preclinical and clinical development of product candidates[108](index=108&type=chunk) - R&D expenses include salaries, payroll taxes, employee benefits, stock-based compensation, consulting expenses, third-party R&D expenses, laboratory supplies, clinical materials, and overhead[108](index=108&type=chunk) - The Australian Tax Incentive is recognized as a reduction of research and development expense[110](index=110&type=chunk) - The company plans to substantially increase its research and development expenses for the foreseeable future as it continues the development of its product candidates and the discovery of new product candidates[110](index=110&type=chunk) - Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations[110](index=110&type=chunk) [General and administrative](index=24&type=section&id=General%20and%20administrative) G&A expenses, including personnel, legal, and professional fees, are expected to increase to support R&D, potential commercialization, and public company operations - General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance, and other administrative functions[111](index=111&type=chunk) - Other significant costs include facility-related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services, insurance costs, and commercial planning expenses[111](index=111&type=chunk) - General and administrative expenses are anticipated to increase in the future to support continued research and development activities and, if any product candidates receive marketing approval, commercialization activities[111](index=111&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on GAAP and subjective estimates, particularly for license revenue recognition, where significant judgment in variable consideration and standalone selling prices could materially affect reported revenues - The preparation of condensed consolidated financial statements requires management to make subjective estimates and judgments that affect reported amounts[112](index=112&type=chunk) - Revenue recognition for licensing arrangements follows a five-step model, involving significant judgment in estimating variable consideration and allocating transaction price[114](index=114&type=chunk) - Estimates for standalone selling price for license-related performance obligations involve assumptions regarding forecasted revenues, development timelines, discount rates, and probabilities of success[114](index=114&type=chunk) - Material changes in estimates of expected total costs and timing of activities, or initial assumptions for standalone selling price, could affect reported license revenues[116](index=116&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section compares Q1 2022 and Q1 2021 financial results, detailing changes in license revenues, operating expenses, other income/expense, and equity investment loss, resulting in a higher net loss [Comparison of the three months ended March 31, 2022 and 2021](index=26&type=section&id=Comparison%20of%20the%20three%20months%20ended%20March%2031,%202022%20and%202021) Q1 2022 license revenues increased to **$3.1 million**, R&D expenses rose by **$10.7 million** to **$28.3 million**, and G&A expenses increased by **$3.4 million** to **$8.7 million**, leading to a higher net loss including a **$1.0 million** equity investment loss | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | Dollar Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------ | | License revenues | $3,131 | $0 | $3,131 | | Research and development | $28,252 | $17,584 | $10,668 | | General and administrative | $8,706 | $5,334 | $3,372 | | Loss from operations | $(33,827) | $(22,918) | $(10,909) | | Other income (expense), net | $210 | $17 | $193 | | Loss on equity method investment | $(1,010) | $0 | $(1,010) | | Net loss | $(34,627) | $(22,901) | $(11,726) | - The increase in R&D expenses was primarily due to an increase in personnel costs of **$3.0 million** (including **$1.4 million** of stock-based compensation) and increased spending on manufacturing and development activities of **$7.0 million**[117](index=117&type=chunk) - The increase in G&A expenses was primarily due to an increase in personnel costs of **$2.1 million** (including **$1.0 million** of stock-based compensation) and increased consulting and outside services of **$0.9 million**[117](index=117&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) Net cash used in operating activities decreased to **$13.5 million** in Q1 2022 due to the **$13.0 million** Sanwa License payment, while investing activities saw a **$43.4 million** net outflow, and financing provided **$1.8 million** | Cash Flow Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(13,543) | $(20,067) | | Net cash (used in) provided by investing activities | $(43,384) | $32,502 | | Net cash provided by financing activities | $1,780 | $57 | | Net change in cash, cash equivalents and restricted cash | $(55,147) | $12,492 | - The decrease in cash used in operations was primarily attributable to the **$13.0 million** upfront payment received upon the execution of the Sanwa License in February 2022[121](index=121&type=chunk) - Net cash provided by financing activities during 2022 and 2021 resulted from the exercise of stock options[121](index=121&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's **$319.7 million** in capital and **$117.3 million** raised in April 2022 are sufficient for 12 months, but substantial future capital is needed for R&D and operations, likely through equity, debt, or collaborations, with potential dilution - The company believes its existing capital resources, together with investment income, will be sufficient to satisfy current and projected funding requirements for at least the next twelve months[122](index=122&type=chunk) - Future capital requirements will depend on factors such as the type, number, scope, progress, and costs of preclinical studies and clinical trials, manufacturing, regulatory review, and intellectual property costs[122](index=122&type=chunk) - The company expects to finance its cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements[122](index=122&type=chunk) - To the extent additional capital is raised through equity or convertible debt, ownership interest of stockholders may be diluted, and debt/preferred equity financing may involve restrictive covenants[124](index=124&type=chunk) - On April 18, 2022, the company completed an underwritten follow-on offering, generating approximately **$117.3 million** in net proceeds[124](index=124&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, foreign currency, and inflation; interest rate risk is minimal, foreign currency risk is unhedged and immaterial, and inflation has not materially affected operations [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) The company's interest rate risk on cash, cash equivalents, and investment securities is minimal due to their short-term nature, with no material impact expected from sudden rate changes - The company is exposed to market risk related to fluctuations in interest rates, primarily affecting cash, cash equivalents, and investment securities[126](index=126&type=chunk) - A sudden change in market interest rates is not expected to have a material impact due to the short-term nature of the instruments in its portfolio[126](index=126&type=chunk) [Foreign Currency](index=29&type=section&id=Foreign%20Currency) The company faces foreign currency risk from international vendors and its Australian subsidiary, with immaterial net gains/losses of **$17,000** in Q1 2022, and does not hedge this exposure - The company contracts with vendors, CROs, and investigational sites in several foreign countries, exposing it to fluctuations in foreign currency rates[127](index=127&type=chunk) - The functional currency of Crinetics Australia Pty Ltd (CAPL) is the U.S. dollar[127](index=127&type=chunk) - Net realized and unrealized gains and losses from foreign currency transactions totaled approximately **$17,000** for the three months ended March 31, 2022[127](index=127&type=chunk) - The company does not hedge its foreign currency exchange rate risk[127](index=127&type=chunk) [Inflation Risk](index=29&type=section&id=Inflation%20Risk) Inflation impacts labor and clinical trial costs, but the company believes it has not materially affected its results of operations for the periods presented - Inflation generally affects the company by increasing its cost of labor and clinical trial costs[128](index=128&type=chunk) - The company does not believe that inflation has had a material effect on its results of operations for the periods presented[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, at the reasonable assurance level[130](index=130&type=chunk) - There has been no change in internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[130](index=130&type=chunk) [PART II — OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and a list of exhibits [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in material legal proceedings and expects no material adverse effect from ordinary course claims on its financial position - The Company is not currently a p

Part I [Business](index=4&type=section&id=Item%201.%20Business) Crinetics Pharmaceuticals is a clinical-stage company developing oral nonpeptide therapeutics for rare endocrine diseases and tumors, with a pipeline including Paltusotine and CRN04777 [Business Overview and Pipeline](index=4&type=section&id=Business%20Overview%20and%20Pipeline) Crinetics is a clinical-stage pharmaceutical company focused on developing oral small-molecule therapeutics for rare endocrine diseases and tumors, with a diverse pipeline and a radiopharmaceutical collaboration - The company focuses on discovering and developing **oral nonpeptide (small molecule) therapeutics** for rare endocrine diseases and endocrine-related tumors[12](index=12&type=chunk) Product Candidate Pipeline Summary | Product Candidate | Target/Mechanism | Indication(s) | Development Stage | | :--- | :--- | :--- | :--- | | **Paltusotine** | SST2 Agonist | Acromegaly, Neuroendocrine Tumors (NETs) | Phase 3 (Acromegaly), Phase 2 (NETs) | | **CRN04777** | SST5 Agonist | Congenital Hyperinsulinism (HI) | Phase 1 Complete, Phase 2 Planned | | **CRN04894** | ACTH Antagonist | Cushing's Disease, CAH, EAS | Phase 1 Ongoing | | **PTH Antagonist** | PTH Receptor Antagonist | Hyperparathyroidism (PHPT), HHM | Preclinical | - In October 2021, Crinetics co-founded Radionetics Oncology, granting an exclusive worldwide license for radiotherapeutics in exchange for a majority equity stake, potential milestones over **$1.0 billion**, and royalties[20](index=20&type=chunk) [Our Strategy](index=6&type=section&id=Our%20Strategy) The company's strategy focuses on becoming a leader in rare endocrine disease treatment by advancing oral therapies, expanding its pipeline, and retaining commercial rights, with a recent licensing exception for Japan - Focus on rare endocrine diseases and tumors with significant unmet medical need, aiming to advance the standard of care with **orally available therapies**[23](index=23&type=chunk) - Leverage an experienced discovery team to expand the therapeutic pipeline, targeting **peptide hormone GPCRs**[23](index=23&type=chunk) - Intends to retain significant development and commercial rights, with a license agreement for paltusotine commercialization in Japan entered in February 2022[23](index=23&type=chunk) [Paltusotine (SST2 Agonist Program)](index=9&type=section&id=Paltusotine%20(SST2%20Agonist%20Program)) Paltusotine is an oral, selective SST2 agonist in Phase 3 development for acromegaly and Phase 2 for neuroendocrine tumors, with topline data for both expected in 2023 - Paltusotine is an **oral selective nonpeptide SST2 agonist** for treating acromegaly and NETs, holding FDA orphan drug designation for acromegaly[30](index=30&type=chunk) - Two Phase 3 trials for acromegaly, PATHFNDR-1 and PATHFNDR-2, are ongoing with **topline data expected in 2023**, aiming to support broad registration[15](index=15&type=chunk)[40](index=40&type=chunk) - A Phase 2 trial of paltusotine for NETs with carcinoid syndrome has been initiated, with **topline data also expected in 2023**[30](index=30&type=chunk)[40](index=40&type=chunk) - In February 2022, the company licensed exclusive rights to Sanwa Kagaku Kenkyusho Co., Ltd. for paltusotine development and commercialization in Japan[15](index=15&type=chunk)[30](index=30&type=chunk) [CRN04777 (SST5 Agonist Program)](index=12&type=section&id=CRN04777%20(SST5%20Agonist%20Program)) CRN04777 is an oral, selective SST5 agonist for congenital hyperinsulinism, having completed Phase 1 with positive proof-of-concept and planning Phase 2 initiation in H2 2022, holding rare pediatric and orphan drug designations - CRN04777 is an **oral SST5 agonist** for congenital HI, holding rare pediatric disease designation from the FDA and orphan drug designation from the EMA[16](index=16&type=chunk)[43](index=43&type=chunk) - Positive top-line data from Phase 1 single and multiple ascending dose cohorts, announced in September 2021 and March 2022, demonstrated **pharmacologic proof-of-concept**[16](index=16&type=chunk)[47](index=47&type=chunk) - The company plans to initiate a **Phase 2 clinical study in the second half of 2022** following regulatory discussions[16](index=16&type=chunk)[49](index=49&type=chunk) [CRN04894 (ACTH Antagonist Program)](index=14&type=section&id=CRN04894%20(ACTH%20Antagonist%20Program)) CRN04894 is an oral, nonpeptide ACTH antagonist for diseases of ACTH excess, with positive Phase 1 single ascending dose data showing cortisol reduction, and multiple ascending dose data expected in Q2 2022, followed by further clinical studies in H2 2022 - CRN04894 is an **oral ACTH antagonist** for diseases of ACTH excess such as Cushing's disease and CAH[17](index=17&type=chunk)[50](index=50&type=chunk) - Positive data from the single ascending dose cohorts of the Phase 1 study, announced in August 2021, showed the drug was **well-tolerated and reduced cortisol levels**[18](index=18&type=chunk)[55](index=55&type=chunk) - Topline data from the multiple ascending dose portion of the Phase 1 study are expected in **Q2 2022**, with plans to initiate subsequent clinical studies in **H2 2022**[18](index=18&type=chunk)[50](index=50&type=chunk)[55](index=55&type=chunk) [Competition](index=15&type=section&id=Competition) The company faces significant competition from established pharmaceutical and biotech companies across its therapeutic areas, including acromegaly, neuroendocrine tumors, congenital hyperinsulinism, and ACTH excess disorders - For acromegaly, paltusotine competes with injected somatostatin analogs and Amryt Pharma's **oral octreotide product, MYCAPSSA**[56](index=56&type=chunk)[58](index=58&type=chunk) - For congenital HI, CRN04777 would compete with the only approved therapy, **diazoxide (Teva)**, and off-label octreotide use, alongside other developers like Rezolute and Eiger Biopharmaceuticals[58](index=58&type=chunk) - For Cushing's disease and CAH, CRN04894 faces competition from adrenal enzyme inhibitors, glucocorticoid receptor antagonists, and cortisol synthesis inhibitors[59](index=59&type=chunk) [Intellectual Property](index=16&type=section&id=Intellectual%20Property) The company actively protects its technology through patents, with key product patents expiring between 2037 and 2040, and some intellectual property is subject to U.S. government regulations due to funding - Issued patents for **paltusotine** in the U.S. and Japan are estimated to expire in **2037**, excluding potential extensions[63](index=63&type=chunk) - Issued patents for **CRN04894** in the U.S. are estimated to expire in **2039**, and patent applications for **CRN04777**, if issued, are estimated to expire in **2040**[63](index=63&type=chunk) - Intellectual property generated through U.S. government SBIR Grants is subject to federal regulations, including potential government rights under the **Bayh-Dole Act**[63](index=63&type=chunk)[166](index=166&type=chunk) [Government Regulation](index=18&type=section&id=Government%20Regulation) The company's products are subject to extensive regulation by the FDA and foreign authorities, encompassing drug development, clinical trials, special designations like Orphan Drug status, post-approval compliance, and broader healthcare reform and privacy laws - The FDA drug development process requires extensive preclinical testing and multi-phase human clinical trials to establish **safety and efficacy** before NDA submission[69](index=69&type=chunk)[71](index=71&type=chunk) - The company has obtained **Orphan Drug Designation** for paltusotine (acromegaly) and CRN04777 (congenital HI), potentially providing **seven years of market exclusivity** in the U.S[78](index=78&type=chunk)[119](index=119&type=chunk) - The business is subject to healthcare reform measures like the **ACA**, impacting pricing, reimbursement, and market access, along with federal and state anti-kickback and false claims laws[88](index=88&type=chunk)[89](index=89&type=chunk) - The company must comply with data privacy and security laws such as **HIPAA** in the U.S. and **GDPR** in Europe, governing personal and health information handling[92](index=92&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including significant operating losses, early-stage product development uncertainties, lengthy and costly clinical trials, reliance on third-party manufacturing, and challenges related to intellectual property and market competition - The company has a limited operating history, incurred significant operating losses with a **$275.3 million accumulated deficit as of December 31, 2021**, and anticipates continued losses[101](index=101&type=chunk) - The company relies on third parties for manufacturing and clinical trials, increasing risks related to supply, cost, and regulatory compliance (cGMP, GCP)[126](index=126&type=chunk)[128](index=128&type=chunk) - The **COVID-19 pandemic** could continue to adversely impact business operations, including drug manufacturing, nonclinical activities, and clinical trial enrollment and completion[113](index=113&type=chunk) - The company's success depends on protecting its intellectual property, but patents may not be issued, may be challenged, or may expire prematurely[162](index=162&type=chunk) [Properties](index=67&type=section&id=Item%202.%20Properties) The company leases a 29,499 square foot facility in San Diego, California, serving as its corporate headquarters and R&D functions, with the lease expiring in August 2025 - The company leases a **29,499 square foot facility** in San Diego, California for its corporate headquarters and R&D functions[203](index=203&type=chunk) - The current lease expires in **August 2025**, with a five-year extension option[203](index=203&type=chunk) [Legal Proceedings](index=67&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, Crinetics Pharmaceuticals is not a party to any material legal proceedings - The company is not currently a party to any **material legal proceedings**[204](index=204&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=69&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq Global Select Market under "CRNX", has never paid cash dividends, and IPO proceeds have been used for general corporate purposes, primarily product development - Common stock is listed on the **Nasdaq Global Select Market** under the ticker symbol **"CRNX"**[208](index=208&type=chunk) - The company has never declared or paid cash dividends and intends to retain future earnings to finance business operations[209](index=209&type=chunk) - As of December 31, 2021, all proceeds from the **July 2018 IPO** have been used for general corporate purposes, including product development[210](index=210&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For 2021, the company reported a net loss of $107.6 million, an increase from 2020, driven by higher R&D and G&A expenses, partially offset by $1.1 million in license revenue, with $333.7 million in cash and investments deemed sufficient for at least 12 months of operations [Results of Operations](index=75&type=section&id=Results%20of%20Operations) In 2021, total revenues were $1.1 million from license agreements, while R&D expenses increased by $27.3 million to $84.3 million and G&A expenses rose by $6.5 million to $24.5 million, resulting in a net loss of $107.6 million Comparison of Results of Operations (2021 vs. 2020) (in thousands) | (In thousands) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | **Total revenues** | $1,078 | $71 | $1,007 | | Research and development | $84,255 | $56,998 | $27,257 | | General and administrative | $24,525 | $18,026 | $6,499 | | **Total operating expenses** | $108,780 | $75,024 | $33,756 | | Loss from operations | ($107,702) | ($74,953) | ($32,749) | | **Net loss** | **($107,641)** | **($73,812)** | **($33,829)** | - The increase in R&D expenses in 2021 was primarily due to a **$13.5 million** increase in manufacturing and development activities and a **$12.3 million** increase in personnel and related costs[237](index=237&type=chunk) - The increase in G&A expenses in 2021 was mainly due to a **$4.5 million** increase in personnel-related costs and a **$2.1 million** increase in spending on recruiting, consulting, and pre-commercialization activities[237](index=237&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company held $333.7 million in cash and investments, deemed sufficient for at least one year, having raised approximately $234.6 million from follow-on offerings and $15.0 million from a private placement in 2021 - As of December 31, 2021, the company had **$333.7 million** in unrestricted cash, cash equivalents, and investment securities[243](index=243&type=chunk) - In 2021, the company raised net proceeds of approximately **$72.6 million** from an April follow-on offering, **$15.0 million** from a July private placement, and **$162.0 million** from an October follow-on offering[245](index=245&type=chunk) - The company believes its existing cash, cash equivalents, and investments will be sufficient to fund operations for at least **one year** from the 10-K filing date[243](index=243&type=chunk) [Cash Flows](index=76&type=section&id=Cash%20Flows) In 2021, net cash used in operating activities increased to $88.6 million, net cash used in investing activities was $56.5 million, and net cash provided by financing activities was $252.7 million, leading to a $107.6 million net increase in cash Comparison of Cash Flows (2021 vs. 2020) (in thousands) | (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($88,588) | ($62,027) | | Net cash (used in) provided by investing activities | ($56,483) | $217 | | Net cash provided by financing activities | $252,679 | $114,571 | | **Net change in cash, cash equivalents and restricted cash** | **$107,608** | **$52,761** | - The increase in cash used in operating activities was primarily due to increased development and manufacturing activities for paltusotine and other programs, along with higher personnel costs[239](index=239&type=chunk) - Cash from financing activities in 2021 was primarily from net proceeds of **$234.6 million** from follow-on public offerings and **$15.0 million** from a private placement[240](index=240&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its short-term cash and investments, which is not expected to be material, and it also faces unhedged foreign currency exchange rate risk from international operations - The primary market risk is interest rate sensitivity on its portfolio of cash, cash equivalents, and investment securities, though the impact is expected to be **minimal** due to the short-term nature of the instruments[247](index=247&type=chunk) - The company is subject to **foreign currency exchange rate risk** from contracts with foreign vendors and its Australian subsidiary, but does not hedge this risk[248](index=248&type=chunk) [Controls and Procedures](index=79&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2021, with no material changes during Q4 2021 - As of December 31, 2021, the principal executive and financial officers concluded that the company's **disclosure controls and procedures were effective**[253](index=253&type=chunk) - Management assessed internal control over financial reporting using the **COSO framework** and concluded it was **effective as of December 31, 2021**[254](index=254&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, Security Ownership, and Accountant Fees](index=81&type=section&id=Item%2010,%2011,%2012,%2013,%2014) Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, and security ownership, is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement for the **2022 annual meeting of stockholders**[260](index=260&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=82&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements, the independent auditor's report, and the Exhibit Index - This item includes the consolidated financial statements of Crinetics Pharmaceuticals, Inc. and the report from its independent registered public accounting firm, **BDO USA, LLP**[270](index=270&type=chunk) - A list of exhibits filed with the Annual Report is set forth on the **Exhibit Index**[270](index=270&type=chunk) Financial Statements [Consolidated Balance Sheets](index=85&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2021, Crinetics reported total assets of $351.0 million, driven by increased cash and investments, with total liabilities at $19.1 million and stockholders' equity growing to $332.0 million from stock offerings Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $200,695 | $93,087 | | Investment securities | $133,012 | $77,793 | | **Total current assets** | **$344,720** | **$177,492** | | **Total assets** | **$351,015** | **$183,445** | | Total current liabilities | $15,995 | $10,489 | | **Total liabilities** | **$19,071** | **$14,526** | | **Total stockholders' equity** | **$331,944** | **$168,919** | [Consolidated Statements of Operations and Comprehensive Loss](index=86&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For 2021, Crinetics reported a net loss of $107.6 million, or ($2.80) per share, primarily due to increased R&D and G&A expenses, partially offset by $1.1 million in license revenue Statement of Operations Data (in thousands, except per share data) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Total revenues | $1,078 | $71 | $1,193 | | Research and development | $84,255 | $56,998 | $41,506 | | General and administrative | $24,525 | $18,026 | $13,519 | | **Loss from operations** | **($107,702)** | **($74,953)** | **($53,832)** | | **Net loss** | **($107,641)** | **($73,812)** | **($50,422)** | | Net loss per share | ($2.80) | ($2.42) | ($2.09) | [Consolidated Statements of Cash Flows](index=88&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2021, net cash used in operating activities was $88.6 million, net cash used in investing activities was $56.5 million, and net cash provided by financing activities was $252.7 million, leading to a $107.6 million net increase in cash Cash Flow Data (in thousands) | | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($88,588) | ($62,027) | | Net cash (used in) provided by investing activities | ($56,483) | $217 | | Net cash provided by financing activities | $252,679 | $114,571 | | **Net change in cash, cash equivalents and restricted cash** | **$107,608** | **$52,761** |

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Financial%20Statements) Crinetics Pharmaceuticals reported no revenue and a net loss of $76.8 million for the nine months ended September 30, 2021, with total assets at $209.4 million and stockholders' equity at $193.6 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $209.4 million by September 30, 2021, driven by higher cash and equivalents, while stockholders' equity rose to $193.6 million | Balance Sheet Items (In thousands) | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $161,536 | $93,087 | | Investment securities | $31,789 | $77,793 | | Total current assets | $203,973 | $177,492 | | Total assets | $209,359 | $183,445 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $12,440 | $10,489 | | Total liabilities | $15,769 | $14,526 | | Total stockholders' equity | $193,590 | $168,919 | | Total liabilities and stockholders' equity | $209,359 | $183,445 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss widened to $27.9 million for Q3 2021 and $76.8 million for the nine-month period, primarily due to increased research and development expenses | Operating Results (In thousands, except per share data) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Grant revenues | $— | $— | $— | $71 | | Research and development | $21,580 | $13,699 | $59,651 | $40,168 | | General and administrative | $6,227 | $4,752 | $17,163 | $13,065 | | Total operating expenses | $27,807 | $18,451 | $76,814 | $53,233 | | Loss from operations | $(27,807) | $(18,451) | $(76,814) | $(53,162) | | Net loss | $(27,851) | $(18,320) | $(76,847) | $(52,171) | | Net loss per share – basic and diluted | $(0.73) | $(0.56) | $(2.13) | $(1.76) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to $65.7 million for the nine months ended September 30, 2021, offset by $88.8 million from financing activities | Cash Flow Summary (In thousands) | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(65,689) | $(46,089) | | Net cash provided by investing activities | $45,315 | $9,109 | | Net cash provided by financing activities | $88,823 | $114,474 | | Net change in cash, cash equivalents and restricted cash | $68,449 | $77,494 | | Cash, cash equivalents and restricted cash at end of period | $162,036 | $118,320 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's clinical focus, financial position with $193.3 million cash, and the formation of Radionetics Oncology as a key subsequent event - The company is a **clinical-stage pharmaceutical firm** focused on therapeutics for rare endocrine diseases and tumors. In October 2021, it formed **Radionetics Oncology, Inc.** with partners to develop radiopharmaceuticals, in which it maintains an equity interest[23](index=23&type=chunk) - As of September 30, 2021, the company had an accumulated deficit of **$244.5 million** but believes its **$193.3 million** in unrestricted cash, cash equivalents, and investments is sufficient to fund operations for at least the next 12 months[27](index=27&type=chunk) - In 2021, the company completed an underwritten follow-on offering in April raising **$72.6 million net**, a private placement in July for **$15.0 million gross**, and another follow-on offering in October raising approximately **$161.9 million net**[59](index=59&type=chunk) - Subsequent to the quarter end, on October 18, 2021, the company formed **Radionetics Oncology**, licensing its radiotherapeutics technology platform in exchange for a **majority stake**, a warrant, potential sales milestones over **$1.0 billion**, and **single-digit royalties**[71](index=71&type=chunk)[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical pipeline advancements, increased operating expenses leading to a $76.8 million net loss, and substantial equity funding to support future operations [Overview and Pipeline](index=17&type=section&id=Overview%20and%20Pipeline) The company, a clinical-stage pharmaceutical firm, is advancing its pipeline with lead candidate paltusotine in Phase 3 for acromegaly and recently formed Radionetics Oncology - **Paltusotine (SST2 Agonist):** A **Phase 3 development program** for acromegaly has been initiated, with top-line data expected in **2023**[80](index=80&type=chunk) - **CRN04777 (SST5 Agonist):** Currently in a **Phase 1 study** for congenital hyperinsulinism, with positive topline data announced in **September 2021**[81](index=81&type=chunk) - **CRN04894 (ACTH Antagonist):** In a **Phase 1 study** for diseases of excess ACTH, preliminary data showed dose-dependent reductions in cortisol[83](index=83&type=chunk) - **Radionetics Oncology, Inc.:** Formed in **October 2021** with partners to develop radiopharmaceuticals, with Crinetics licensing its technology for a **majority equity stake**, potential milestones, and royalties[85](index=85&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Operating results show widening net losses for Q3 and the nine months ended 2021, primarily due to increased research and development expenses and personnel costs | Expense Comparison (In thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $21,580 | $13,699 | $7,881 | | General and administrative | $6,227 | $4,752 | $1,475 | | **Net loss** | **$(27,851)** | **$(18,320)** | **$(9,531)** | | Expense Comparison (In thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $59,651 | $40,168 | $19,483 | | General and administrative | $17,163 | $13,065 | $4,098 | | **Net loss** | **$(76,847)** | **$(52,171)** | **$(24,676)** | - The increase in R&D expenses for the nine-month period was driven by a **$9.4 million** rise in manufacturing and development activities and an **$8.8 million** increase in personnel costs[103](index=103&type=chunk)[105](index=105&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$193.3 million** in cash and investments as of September 30, 2021, bolstered by **$161.9 million** from an October offering, providing sufficient liquidity for the next 12 months - The company had **$193.3 million** in unrestricted cash, cash equivalents, and investment securities as of September 30, 2021[106](index=106&type=chunk) - Net cash used in operating activities increased to **$65.7 million** for the nine months ended Sep 30, 2021, up from **$46.1 million** in the prior year period, due to increased development activities and personnel costs[106](index=106&type=chunk) - In October 2021, the company completed an underwritten public offering, raising approximately **$161.9 million** in net proceeds[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate sensitivity on its short-term investments and foreign currency exposure, neither of which is currently material - The company's primary market risk is **interest rate sensitivity**, but its short-term investment portfolio mitigates material impact from rate changes[114](index=114&type=chunk) - Foreign currency exchange rate risk from its Australian subsidiary and foreign vendor contracts has not had a material adverse effect to date[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - As of September 30, 2021, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** at a reasonable assurance level[117](index=117&type=chunk) - No material changes occurred in internal control over financial reporting during the third quarter of 2021[117](index=117&type=chunk) [PART II — OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - As of the filing date, the company is not involved in any **material legal proceedings**[120](index=120&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No **material changes** have been made to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Approximately **$106.5 million** of the 2018 IPO proceeds have been used for general corporate purposes and development programs as of September 30, 2021 - As of September 30, 2021, the company has used approximately **$106.5 million** of its 2018 IPO proceeds for general corporate purposes and development programs[122](index=122&type=chunk)

Paltusotine (SST2 Agonist) - Crinetics is developing Paltusotine, a potential first-in-class oral nonpeptide SST2 agonist, for Acromegaly, Carcinoid Syndrome, and Nonfunctional Neuroendocrine Tumors[13] - The US prevalence for Acromegaly is 26,000, Carcinoid Syndrome is 33,000, and Nonfunctional NETs is 138,000[9, 14] - Phase 2 ACROBAT Edge study met the primary endpoint, maintaining hormone suppression after switching from injected standard of care to oral paltusotine[36] - Phase 3 program is designed to support potential for broad first-line medical therapy in acromegaly patients[42] CRN04894 (ACTH Antagonist) - Crinetics is developing CRN04894, a potential first-in-class oral nonpeptide ACTH antagonist, for Congenital Adrenal Hyperplasia (CAH) and Cushing's Disease (CD)[45] - The US prevalence for Cushing's Disease is 10,000 and for Congenital Adrenal Hyperplasia (CAH) is 27,000[9, 52] - Phase 1 SAD data showed strong suppression of basal cortisol (56% at 80 mg dose)[69, 76] CRN04777 (SST5 Agonist) - Crinetics is developing CRN04777, a potential first-in-class oral nonpeptide SST5 agonist, for Congenital Hyperinsulinism (HI)[81] - Phase 1 SAD data showed dose-dependent reduction in glucose-induced insulin secretion and reversal of sulfonylurea-induced insulin secretion[110] Market and Financials - The market for Acromegaly and NETs is approximately $3 billion despite limitations of current therapies[16]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's analysis, market risk, and internal controls for the reporting period [Item 1. Condensed Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Financial%20Statements) The unaudited condensed financial statements show increased assets and a larger net loss for the first half of 2021, driven by R&D expenses and stock offerings [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, highlighting assets, liabilities, and stockholders' equity as of June 30, 2021 Condensed Consolidated Balance Sheet Highlights | Account | June 30, 2021 (Unaudited, in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $178,771 | $93,087 | | Total current assets | $211,355 | $177,492 | | **Total assets** | **$216,929** | **$183,445** | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $11,919 | $10,489 | | Total liabilities | $15,489 | $14,526 | | Total stockholders' equity | $201,440 | $168,919 | | **Total liabilities and stockholders' equity** | **$216,929** | **$183,445** | - Total assets increased primarily due to a significant rise in cash and cash equivalents, which grew from **$93.1 million to $178.8 million**, largely funded by stock offerings[7](index=7&type=chunk) - Total stockholders' equity increased from **$168.9 million to $201.4 million**, reflecting capital raised from stock issuances, which offset the accumulated deficit from net losses[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2021 Statement of Operations Highlights | Metric | Three Months Ended June 30, 2021 (in thousands) | Three Months Ended June 30, 2020 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Grant revenues | $— | $— | $— | $71 | | Research and development | $20,487 | $12,607 | $38,071 | $26,469 | | General and administrative | $5,602 | $4,322 | $10,936 | $8,313 | | **Loss from operations** | **$(26,089)** | **$(16,929)** | **$(49,007)** | **$(34,711)** | | **Net loss** | **$(26,095)** | **$(16,491)** | **$(48,996)** | **$(33,851)** | | Net loss per share – basic and diluted | $(0.70) | $(0.53) | $(1.40) | $(1.21) | - Research and development expenses increased by **62.5%** for the three-month period and **43.8%** for the six-month period year-over-year, driving the larger net loss[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in stockholders' equity, including the impact of net loss and common stock issuances - Total stockholders' equity increased from **$168.9 million** at the start of 2021 to **$201.4 million** at June 30, 2021, primarily driven by the issuance of common stock, which added **$72.6 million**, offsetting the net loss of **$49.0 million** for the period[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Highlights | Activity | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(40,016) | $(28,085) | | Net cash provided by investing activities | $52,340 | $33,941 | | Net cash provided by financing activities | $73,360 | $114,632 | | **Net change in cash, cash equivalents and restricted cash** | **$85,684** | **$120,488** | - Cash used in operating activities increased by **42.5%** year-over-year, reflecting higher net loss and changes in operating assets and liabilities[23](index=23&type=chunk) - Financing activities in the first six months of 2021 provided **$73.4 million**, primarily from the net proceeds of a common stock issuance[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides additional disclosures and explanations supporting the condensed consolidated financial statements - The company is a clinical-stage pharmaceutical firm focused on rare endocrine diseases and has an accumulated deficit of **$216.6 million** as of June 30, 2021[26](index=26&type=chunk)[30](index=30&type=chunk) - Management believes its cash, cash equivalents, and investment securities of **$203.8 million** are sufficient to fund requirements for at least the next 12 months[30](index=30&type=chunk) - In April 2021, the company completed a follow-on offering of common stock, raising net proceeds of approximately **$72.6 million**[63](index=63&type=chunk) - Subsequent to the quarter end, on July 28, 2021, the company entered into an agreement for a private placement of common stock, yielding gross proceeds of **$15.0 million**[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition, operational results, and liquidity, highlighting key drivers and future outlook [Overview and Pipeline](index=16&type=section&id=Overview%20and%20Pipeline) This section provides an overview of the company's business, strategic focus, and clinical development pipeline - Crinetics is a clinical-stage pharmaceutical company focused on developing novel therapeutics for rare endocrine diseases and endocrine-related tumors[79](index=79&type=chunk) - The lead product candidate, paltusotine, is in a Phase 3 development program for acromegaly, with top-line data from two placebo-controlled trials (PATHFNDR-1 and PATHFNDR-2) expected in 2023[80](index=80&type=chunk)[82](index=82&type=chunk) - Other clinical-stage candidates include CRN04777 for congenital hyperinsulinism (HI) and CRN04894 for diseases of excess ACTH, such as Cushing's Disease[83](index=83&type=chunk)[84](index=84&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on revenue, expenses, and net loss for the reporting periods Comparison of Three Months Ended June 30 | Expense Category | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Research and development | $20,487 | $12,607 | $7,880 | | General and administrative | $5,602 | $4,322 | $1,280 | | **Total operating expenses** | **$26,089** | **$16,929** | **$9,160** | | **Net loss** | **$(26,095)** | **$(16,491)** | **$(9,604)** | Comparison of Six Months Ended June 30 | Expense Category | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Research and development | $38,071 | $26,469 | $11,602 | | General and administrative | $10,936 | $8,313 | $2,623 | | **Total operating expenses** | **$49,007** | **$34,782** | **$14,225** | | **Net loss** | **$(48,996)** | **$(33,851)** | **$(15,145)** | - The increase in R&D expenses for Q2 2021 was primarily due to a **$4.1 million** increase in manufacturing and development activities and a **$3.0 million** increase in personnel costs[102](index=102&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, capital resources, and ability to fund future operations - As of June 30, 2021, the company had **$203.8 million** in unrestricted cash, cash equivalents, and investment securities and an accumulated deficit of **$216.6 million**[105](index=105&type=chunk) - Management believes existing capital resources are sufficient to fund operations for at least the next twelve months[108](index=108&type=chunk) - Net cash provided by financing activities was **$73.4 million** for the first six months of 2021, mainly from an underwritten follow-on offering in April 2021[107](index=107&type=chunk) - The company has an At-The-Market (ATM) offering agreement for up to **$75.0 million**, but did not issue any shares under this program in the first six months of 2021[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, including interest rate and foreign currency fluctuations, and their potential impact - The primary market risk is interest rate sensitivity on cash, cash equivalents, and investment securities, but due to their short-term nature, a sudden change in rates is not expected to have a material impact[114](index=114&type=chunk) - The company is subject to foreign currency exchange rate risk through its Australian subsidiary and foreign vendor contracts, though net gains and losses were not material for the periods presented[115](index=115&type=chunk) - Inflation has not had a material effect on the company's results of operations[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures, with no material changes reported - Based on an evaluation as of June 30, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[117](index=117&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) [PART II — OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, equity sales, and required exhibits [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[120](index=120&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[121](index=121&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered equity sales and details the use of IPO proceeds for corporate and clinical development - There were no unregistered sales of equity securities during the reporting period[121](index=121&type=chunk) - As of June 30, 2021, the company has used approximately **$98.9 million** of the net proceeds from its IPO for general corporate purposes and clinical development, with no material change in the planned use of proceeds[122](index=122&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The report includes required certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)