Cullinan Oncology(CGEM) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (unaudited) The company's unaudited financials show a net loss of $118.6 million for H1 2025 and reduced total assets Consolidated Balance Sheets Total assets decreased to $520.3 million as of June 30, 2025, driven by lower cash and investments Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $72,820 | $83,005 | | Total current assets | $275,911 | $414,668 | | Total assets | $520,329 | $621,824 | | Liabilities & Equity | | | | Total current liabilities | $28,058 | $30,647 | | Total liabilities | $28,183 | $31,496 | | Total stockholders' equity | $492,146 | $590,328 | | Total liabilities and stockholders' equity | $520,329 | $621,824 | Consolidated Statements of Operations and Comprehensive Income (Loss) Net loss for H1 2025 increased to $118.6 million from $79.4 million in H1 2024 due to higher R&D expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $61,030 | $36,259 | $102,489 | $66,905 | | General and administrative | $14,768 | $13,768 | $28,305 | $26,111 | | Loss from operations | $(75,798) | $(50,027) | $(130,794) | $(93,016) | | Net loss attributable to Cullinan | $(70,055) | $(42,028) | $(118,556) | $(79,176) | | Basic and diluted net loss per share (Common) | $(1.07) | $(0.68) | $(1.81) | $(1.43) | Consolidated Statements of Stockholders' Equity Stockholders' equity declined to $492.1 million by June 30, 2025, primarily due to the net loss - The primary driver for the decrease in stockholders' equity in the first half of 2025 was the net loss of $118.6 million[24] - In the first half of 2024, the company raised net proceeds of $262.7 million from the issuance of common stock and pre-funded warrants[26][54] Consolidated Statements of Cash Flows Net cash used in operations was $100.8 million for H1 2025, contributing to a $10.2 million decrease in cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(100,764) | $(74,538) | | Net cash provided by (used in) investing activities | $90,206 | $(172,156) | | Net cash provided by financing activities | $373 | $263,281 | | Net (decrease) increase in cash | $(10,185) | $16,587 | Notes to the Consolidated Financial Statements The company has sufficient cash for the next twelve months and expensed a $20.0 million upfront license fee - The company believes its cash, cash equivalents, and investments totaling $510.9 million as of June 30, 2025, will fund operations and capital expenditures for at least the next twelve months[34] - In June 2025, Cullinan entered into a license agreement with Genrix for velinotamig, paying a $20.0 million upfront fee which was recorded as R&D expense[44][45][47] - Under the Taiho co-development agreement for zipalertinib, Cullinan recorded its share of R&D costs from Taiho totaling $7.8 million and $13.4 million for the three and six months ended June 30, 2025, respectively[50] - In April 2024, Cullinan raised net proceeds of $262.7 million through a private placement of common stock and pre-funded warrants[54] Management's Discussion and Analysis of Financial Condition and Results of Operations R&D expenses rose due to a $20.0 million license fee, while cash reserves are deemed sufficient for operations Overview The company is a clinical-stage biopharmaceutical firm focused on immunology and oncology programs - Immunology Pipeline: - CLN-978 (CD19xCD3): Phase 1 trials ongoing in SLE, RA, and SjD, with initial SLE data expected in Q4 2025 - Velinotamig (BCMAxCD3): Licensed from Genrix; a Phase 1 trial in autoimmune diseases is planned by Genrix in China by year-end 2025[78][80] - Oncology Pipeline: - Zipalertinib (EGFR inhibitor): Co-developed with Taiho, Phase 2b met its primary endpoint in NSCLC, with an NDA submission planned by year-end 2025 - CLN-049 (FLT3xCD3): Phase 1 trial ongoing in AML, with data expected in Q4 2025 - CLN-619 (MICA/B antibody): Phase 1 continues in NSCLC and multiple myeloma - CLN-617 (IL-2/IL-12 fusion protein): Phase 1 ongoing in advanced solid tumors[79][80][88] - The company recently discontinued development of CLN-619 in gynecological cancers and terminated the license for CLN-418 to focus resources[82][83] Results of Operations Operating expenses increased significantly, driven by a one-time $20.0 million R&D in-licensing fee - The $24.8 million increase in Q2 2025 R&D expenses was primarily driven by a $20.0 million upfront license fee for velinotamig, along with higher clinical and personnel costs[99] - The $35.6 million increase in H1 2025 R&D expenses was also mainly due to the $20.0 million velinotamig fee, plus increases in clinical costs ($9.7 million) and personnel costs ($5.6 million)[100] Research and Development Expenses by Category (in thousands) | Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Clinical-stage product candidates | $25,022 | $23,689 | $51,661 | $43,326 | | Early-stage programs | $1,986 | $1,455 | $3,008 | $2,816 | | R&D personnel and operations | $9,741 | $7,236 | $19,572 | $13,724 | | License agreement obligations | $20,115 | $25 | $20,153 | $50 | | Equity-based compensation | $4,166 | $3,854 | $8,095 | $6,989 | | Total R&D Expenses | $61,030 | $36,259 | $102,489 | $66,905 | Liquidity and Capital Resources The company holds $510.9 million in cash and investments, sufficient for at least the next twelve months - As of June 30, 2025, the company had $510.9 million in cash, cash equivalents, and investments[105] - The company expects its current capital to fund operations through at least the next twelve months from the financial statement issuance date[106] - The company has an at-the-market (ATM) equity offering program with $85.6 million remaining available for sale as of June 30, 2025[109] Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(100,764) | $(74,538) | | Net cash provided by (used in) investing activities | $90,206 | $(172,156) | | Net cash provided by financing activities | $373 | $263,281 | Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - As a smaller reporting company, Cullinan is not required to provide the information for this item[126] Controls and Procedures Disclosure controls and procedures were deemed effective with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[127] - No changes occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[129] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - Cullinan is not currently party to any litigation or legal proceedings that management believes are probable to have a material adverse effect on the business[131] Risk Factors A new risk factor was added related to reduced reporting requirements as a smaller reporting company - A new risk factor has been added: due to its qualification as a smaller reporting company, the company will be subject to reduced reporting requirements, which could make its common stock less attractive to investors[133] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period Defaults Upon Senior Securities This item is not applicable for the reporting period Mine Safety Disclosures This item is not applicable for the reporting period Other Information No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the fiscal quarter[136] Exhibits This section lists exhibits filed, including a new license agreement and officer certifications