Crinetics Pharmaceuticals(CRNX) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's accounting policies, financial instruments, lease obligations, revenue recognition, equity activities, and investments Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------ | | Cash and cash equivalents | $53,726 | $264,545 | | Investment securities | $1,142,634 | $1,089,524 | | Total current assets | $1,217,264 | $1,375,388 | | Total assets | $1,289,574 | $1,434,592 | | Total current liabilities | $68,396 | $59,684 | | Total liabilities | $118,048 | $109,787 | | Total stockholders' equity | $1,171,526 | $1,324,805 | Condensed Consolidated Statements of Operations and Comprehensive Loss This statement reports the company's revenues, expenses, and net loss over specific periods, along with comprehensive loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,031 | $399 | $1,392 | $1,039 | | Research and development | $80,301 | $58,344 | $156,541 | $111,685 | | Selling, general and administrative | $49,842 | $24,838 | $85,368 | $45,666 | | Total operating expenses | $130,143 | $83,182 | $241,909 | $157,351 | | Loss from operations | $(129,112) | $(82,783) | $(240,517) | $(156,312) | | Interest income | $13,455 | $8,741 | $28,289 | $16,061 | | Net loss | $(115,637) | $(74,055) | $(212,411) | $(140,985) | | Net loss per share — basic and diluted | $(1.23) | $(0.94) | $(2.27) | $(1.86) | | Comprehensive loss | $(116,018) | $(74,395) | $(211,753) | $(142,152) | Condensed Consolidated Statements of Stockholders' Equity This statement details changes in the company's equity accounts, including common stock, paid-in capital, and accumulated deficit - Accumulated deficit increased from $(952,110)K at January 1, 2025, to $(1,164,521)K at June 30, 2025, primarily due to the net loss of $(212,411)K[16] - Common stock and paid-in capital increased by $58,586K from January 1, 2025, to June 30, 2025, driven by stock-based compensation ($46,602K) and exercise of stock options ($8,981K)[16] - Total stockholders' equity decreased from $1,324,805K at January 1, 2025, to $1,171,526K at June 30, 2025[16] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(174,303) | $(100,500) | | Net cash used in investing activities | $(48,008) | $(53,332) | | Net cash provided by financing activities | $11,492 | $401,097 | | Net change in cash, cash equivalents and restricted cash | $(210,819) | $247,265 | | Cash, cash equivalents and restricted cash at end of period | $55,026 | $303,462 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies, financial instruments, lease obligations, revenue recognition, equity activities, and investments Note 1. Organization and Basis of Presentation This note outlines the company's business, financial condition, and future funding expectations - Crinetics Pharmaceuticals is a clinical-stage company focused on novel therapeutics for endocrine diseases and endocrine-related tumors, with lead product candidates paltusotine and atumelnant[22] - The company has an accumulated deficit of $1.2 billion as of June 30, 2025, but believes its $1.2 billion in cash, cash equivalents, and investment securities are sufficient to meet funding requirements for at least the next 12 months[27][28] - The company expects to incur net losses for the foreseeable future and anticipates needing to raise substantial additional capital through equity offerings, debt financings, or collaborations[29] Note 2. Investment Securities This note details the company's available-for-sale investment securities, including fair values and unrealized gains/losses Available-for-Sale Investment Securities (in thousands) | Metric | June 30, 2025 Fair Market Value | December 31, 2024 Fair Market Value | | :-------------------------------- | :------------------------------ | :-------------------------------- | | U.S. government obligations | $592,615 | $543,344 | | Agency obligations | $51,450 | $57,931 | | Corporate debt securities | $498,569 | $488,249 | | Total | $1,142,634 | $1,089,524 | - As of June 30, 2025, total gross unrealized gains were $1,784K and total gross unrealized losses were $(135)K[36] - The company determined that decreases in fair value are attributable to changes in interest rates, not credit quality, and does not intend to sell before recovery of amortized cost basis, resulting in no allowances for credit losses[38] Note 3. Fair Value Measurements This note describes the valuation methodologies and inputs used for financial assets measured at fair value Financial Assets Measured at Fair Value (in thousands) | Category | June 30, 2025 Total | December 31, 2024 Total | | :-------------------------------- | :------------------ | :------------------ | | Cash equivalents | $45,022 | $254,430 | | Investment securities | $1,142,634 | $1,089,524 | | Other non-current assets (Deferred compensation plan) | $2,345 | $829 | | Total assets measured at fair value | $1,190,001 | $1,344,783 | - Fair value measurements primarily utilize Level 1 (e.g., money market funds, U.S. government obligations) and Level 2 inputs (e.g., agency obligations, corporate debt securities), with no Level 3 assets[40] Note 4. Balance Sheet Details This note provides a breakdown of specific balance sheet accounts, including prepaid expenses and accrued liabilities Prepaid Expenses and Other Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Prepaid clinical costs | $12,208 | $6,842 | | Interest receivable | $8,381 | $8,310 | | Prepaid subscriptions | $5,043 | $2,561 | | Deferred compensation plan | $2,345 | $829 | | Total prepaid expenses and other assets | $35,342 | $23,648 | Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable | $11,325 | $5,853 | | Accrued outside services and professional fees | $11,615 | $5,572 | | Accrued clinical trial costs | $7,939 | $3,076 | | Total | $38,086 | $21,469 | Note 5. Operating Leases This note outlines the company's operating lease obligations, costs, and key lease terms Future Minimum Payments Under Non-Cancellable Operating Leases (in thousands) | Year ending December 31, | Minimum Payments | | :----------------------- | :--------------- | | 2025 (six months) | $3,524 | | 2026 | $6,795 | | 2027 | $6,999 | | 2028 | $7,209 | | 2029 | $7,425 | | Thereafter | $43,550 | | Total future minimum lease payments | $75,502 | | Total operating lease liabilities | $49,936 | - Operating lease cost was $4.4 million for the six months ended June 30, 2025, compared to $4.3 million for the same period in 2024[46] - As of June 30, 2025, the weighted-average remaining lease term was 9.8 years and the weighted-average discount rate was 8.6%[47] Note 6. Commitments and Contingencies This note discusses the company's legal claims and other commitments, assessing their potential financial impact - The company does not expect that the resolution of ordinary course legal claims and suits will have a material adverse effect on its financial position or results of operations[49] Note 7. Revenue Recognition This note details the sources and recognition of the company's revenues from license and supply agreements - Revenues for the three and six months ended June 30, 2025, were $0.6 million and $1.0 million, respectively, recognized from the Sanwa License[53] - An additional $0.4 million and $0.1 million in revenues were recognized from the Sanwa Clinical Supply Agreement for the three and six months ended June 30, 2025, respectively[54] - The company granted Loyal an exclusive license for CRN01941 for veterinary use, receiving a $0.1 million upfront payment and Loyal preferred stock valued at $2.0 million, with no revenue recognized to date from this agreement[55][56] Note 8. Stockholders' Equity This note describes significant changes in stockholders' equity, including capital raises and share issuances - In March 2024, the company completed a private placement of 8,333,334 common shares, generating approximately $335.5 million in net proceeds[57] - In October 2024, a public offering of 11,500,000 common shares generated approximately $542.8 million in net proceeds[58] - The 2024 ATM Offering allows for the sale of up to $350.0 million of common stock, but no shares have been issued under it during the three and six months ended June 30, 2025[60] Note 9. Equity Incentive Plans This note provides details on the company's equity incentive plans, available shares, and stock-based compensation expense - As of June 30, 2025, 2,379,126 shares were available for future issuance under the 2021 Inducement Plan, 5,232,485 shares under the 2018 Incentive Award Plan, and 2,865,513 shares under the ESPP[61][62][64] - Stock-based compensation expense totaled $46,602K for the six months ended June 30, 2025, an increase from $32,394K in the prior year period[69] Unrecognized Stock-Based Compensation Expense (in thousands) | Award Type | Unrecognized Stock-Based Compensation Expense | | :----------------------- | :------------------------------------------ | | Stock option awards | $153,517 | | RSU awards | $67,952 | | ESPP | $6,839 | Note 10. Investment in Radionetics This note describes the company's equity investment in Radionetics Oncology, including its valuation and strategic developments - The company holds a 25% equity ownership in Radionetics Oncology, Inc. as of June 30, 2025, accounted for under the equity method, with the investment asset previously written down to zero[73] - Radionetics formed a strategic partnership with Eli Lilly and Company in July 2024, receiving a $140 million upfront payment and granting Lilly an exclusive option to acquire Radionetics for $1.0 billion[72] - No equity method losses were recorded for the three and six months ended June 30, 2025, compared to $0.5 million in losses during the same period in 2024[73] Note 11. Segment Reporting This note clarifies that the company operates in a single reportable segment and provides a breakdown of segment expenses - The company operates in a single reportable segment, with performance assessed based on condensed consolidated net loss[75] Segment Expenses (Six months ended June 30, 2025, in thousands) | Category | Amount | | :-------------------------------- | :------- | | Paltusotine R&D expenses | $(30,653) | | Atumelnant R&D expenses | $(18,194) | | Early research and development programs | $(16,643) | | Research and development personnel expenses | $(53,673) | | Selling, general and administrative expenses | $(85,368) | | Segment and consolidated net loss | $(212,411) | Note 12. Net Loss Per Share This note explains the calculation of basic and diluted net loss per share, including anti-dilutive securities - Basic and diluted net loss per share were both $(2.27) for the six months ended June 30, 2025, as potentially dilutive securities were anti-dilutive[12][77] - Potentially dilutive securities not included in diluted EPS calculation totaled 17,623K common stock equivalent shares as of June 30, 2025, comprising stock options, unvested RSUs, and estimated ESPP shares[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting key pipeline updates for paltusotine and atumelnant, progress in early-stage research, and an in-depth analysis of revenues, operating expenses, and liquidity Forward Looking Statements This section discusses statements regarding future results, business strategy, product approvals, and R&D costs, which are subject to risks and uncertainties - The report contains forward-looking statements regarding future results, business strategy, product approvals, and R&D costs, which are subject to risks and uncertainties[80] Overview This section provides an overview of Crinetics Pharmaceuticals, a clinical-stage company focused on endocrine diseases and tumors - Crinetics Pharmaceuticals is a clinical-stage company focused on discovering, developing, and commercializing novel therapeutics for endocrine diseases and endocrine-related tumors[81] - Lead product candidate, paltusotine, is under FDA and European regulatory review for acromegaly and in clinical development for carcinoid syndrome[81] - Second product candidate, atumelnant, is in clinical development for congenital adrenal hyperplasia (CAH) and ACTH-Dependent Cushing's Syndrome (ADCS)[81] Key Pipeline Updates This section highlights significant developments in the company's product pipeline, including paltusotine and atumelnant - Paltusotine's U.S. FDA review for PALSONIFY™ in acromegaly continues, with an estimated 11,000 addressable patients and 500 newly diagnosed annually in the U.S[84] - Atumelnant's Phase 2 TouCAHn study in CAH reported positive results, showing rapid, substantial, and sustained statistically significant reduction in A4 levels, with a Phase 3 CALM-CAH study designed to normalize A4 levels[84] - IND clearance was received for CRN09682, the first candidate from the nonpeptide drug conjugate (NDC) platform, with a Phase 1/2 dose escalation study planned for SST2-positive neuroendocrine tumors[87] Financial operations overview This section summarizes the company's financial operations, including resource allocation, cumulative losses, and future funding needs - The company has devoted substantially all resources to drug discovery, preclinical/clinical trials, and intellectual property, and has not generated any product sales to date[86] - Cumulative net losses and negative cash flows from operations have been incurred since inception, with an accumulated deficit of $1.2 billion as of June 30, 2025[88] - Expenses and operating losses are expected to increase substantially, necessitating future financing through equity offerings, debt, or collaborations[88][89] Revenues This section details the company's revenue sources, primarily from research grants and license agreements - Revenues are primarily derived from research grants and license agreements, specifically the Sanwa License and Sanwa Clinical Supply Agreement[90] Revenues (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :----------------------- | :----- | :----- | :--------- | :--------- | | Three months ended June 30 | $1,031 | $399 | $632 | 158% | | Six months ended June 30 | $1,392 | $1,039 | $353 | 34% | - The New Drug Application (NDA) for PALSONIFY™ for acromegaly was accepted by the FDA, with a Prescription Drug User Fee Act (PDUFA) Target Action Date of September 25, 2025[90] Research and development This section analyzes the company's research and development expenses, driven by clinical program advancements and portfolio expansion - Research and development expenses increased by $44.9 million (40%) to $156.5 million for the six months ended June 30, 2025, compared to the prior year period[98][99] - The increase was primarily due to higher headcount, increased manufacturing activities, and rising clinical costs driven by the advancement of clinical programs (paltusotine, atumelnant) and expansion of the preclinical portfolio[99][102] Research and Development Expenses by Program (Six months ended June 30, in thousands) | Program | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Paltusotine | $30,653 | $25,419 | $5,234 | 21% | | Atumelnant | $18,194 | $8,962 | $9,232 | 103% | | Early research and development programs | $16,643 | $11,873 | $4,770 | 40% | | Personnel expenses | $53,673 | $36,586 | $17,087 | 47% | | Stock-based compensation | $24,918 | $19,056 | $5,862 | 31% | Selling, general and administrative This section examines the company's selling, general and administrative expenses, influenced by personnel and pre-commercialization costs - Selling, general and administrative expenses increased by $39.7 million (87%) to $85.4 million for the six months ended June 30, 2025, compared to the prior year period[98][103] - This increase was primarily driven by higher personnel expenses ($20.0 million increase, including $8.3 million in stock-based compensation) and increased outside services ($16.0 million increase) to support overall growth and the planned commercial launch of PALSONIFY™[103] Critical Accounting Estimates This section confirms no material changes to the company's critical accounting estimates since the prior annual report - There have been no material changes to the company's critical accounting estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[97] Results of Operations This section summarizes the company's financial performance, including revenues, operating expenses, and net loss over specified periods Summary of Results of Operations (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,031 | $399 | $1,392 | $1,039 | | Total operating expenses | $130,143 | $83,182 | $241,909 | $157,351 | | Loss from operations | $(129,112) | $(82,783) | $(240,517) | $(156,312) | | Other income, net | $13,475 | $8,728 | $28,106 | $15,797 | | Net loss | $(115,637) | $(74,055) | $(212,411) | $(140,985) | - Net loss increased by 56% for the three months and 51% for the six months ended June 30, 2025, compared to the prior year periods[98] - Other income, net, increased by 54% and 78% for the three and six months ended June 30, 2025, respectively, primarily due to increased income from investment securities[98][104] Liquidity and Capital Resources This section assesses the company's financial liquidity and capital resources, including cash, investments, and future funding requirements Financial Condition Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------------ | :------------ | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $53,726 | $264,545 | $(210,819) | (80)% | | Investment securities | $1,142,634 | $1,089,524 | $53,110 | 5% | | Cash, cash equivalents and investment securities | $1,196,360 | $1,354,069 | $(157,709) | (12)% | | Working capital | $1,148,868 | $1,315,704 | $(166,836) | (13)% | | Accumulated deficit | $(1,164,521) | $(952,110) | $(212,411) | 22% | - Existing capital resources, including $1.2 billion in cash, cash equivalents, and investment securities, are believed sufficient to satisfy funding requirements for at least the next twelve months[105] - Net cash used in operating activities increased by 73% to $(174.3) million for the six months ended June 30, 2025, primarily due to higher net loss, personnel costs, R&D expenses, and pre-commercialization costs[111] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the company's Annual Report on Form 10-K for a detailed discussion of market risks, noting no material changes since December 31, 2024 - No material changes to market risks have occurred since December 31, 2024[113] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, at the reasonable assurance level[115] - No material change in internal control over financial reporting occurred during the most recent fiscal quarter[116] PART II — OTHER INFORMATION This section provides additional disclosures on legal proceedings, risk factors, equity sales, and other relevant corporate information Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, though it may be subject to ordinary course claims, which are not expected to have a material adverse effect - The company is not currently involved in any material legal proceedings[119] - Claims incident to the ordinary course of business are not expected to have a material adverse effect on financial position or results of operations[119] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors set forth in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[120] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the period[121] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[122] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to the registrant[123] Item 5. Other Information This section details Rule 10b5-1 trading plan activities by company directors and officers, including terminations and adoptions of plans with specified share amounts and durations Rule 10b5-1 Trading Plan Activities (May-June 2025) | Name | Title of Director or Officer | Action | Date of Action | Duration of Plan | Total Shares of Common Stock to be Sold | | :--- | :--- | :--- | :--- | :--- | :--- | | Dana Pizzuti | Chief Medical and Development Officer | Termination of 10b5-1 plan | May 20, 2025 | January 3, 2025 - December 31, 2025 | Up to 70,000 shares | | Dana Pizzuti | Chief Medical and Development Officer | Adoption of 10b5-1 plan | May 21, 2025 | August 20, 2025 - September 2, 2026 | Up to 96,492 shares | | Isabel Kalofonos | Chief Commercial Officer | Adoption of 10b5-1 plan | June 7, 2025 | January 1, 2026 - December 19, 2026 | Up to 12,500 shares | Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL-related files - The report includes certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 104)[127]