Cullinan Oncology(CGEM) - 2020 Q4 - Annual Report

PART I Business Cullinan Oncology is a biopharmaceutical company developing a diversified pipeline of targeted oncology and immuno-oncology therapies using a hub-and-spoke model - The company operates on a unique hub-and-spoke business model, with a central operating company providing services to separate subsidiaries that advance individual therapeutic candidates[14][28] - Cullinan's strategy focuses on building a diversified pipeline of uncorrelated therapeutic candidates, prioritizing novel technology and differentiated mechanisms[12][25] Cullinan Oncology Pipeline Overview | Program (Project) | Description | Target Indication | Preclinical | Phase 1 | Phase 2 | Next Milestone | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | CLN-081 (Pearl) | Oral small molecule irreversible EGFR inhibitor | NSCLC EGFRex20ins | | ■ | ■ | Clinical update in 1H21 | | CLN-049 (Florentine) | Bispecific mAb targeting FLT3 and CD3 | R/R AML | ■ | | | Program update in 2021 | | CLN-619 (MICA) | Anti-MICA/B IgG1 mAb engaging NK cells | Solid Tumors | ■ | | | Submit IND in 2Q21 | | CLN-978 (NexGem) | Half-life extended bispecific mAb targeting CD19 and CD3 | B-cell ALL | ■ | | | Submit IND in 2022 | | CLN-617 (Amber) | Tumor retained cytokine fusion protein (IL-2 & IL-12) | Pan-cancer | ■ | | | Submit IND in 2022 | | Opal | Bispecific fusion protein (PD-1 block & 4-1BB activation) | Pan-cancer | ■ | | | IND-enabling studies in 2H21 | | Jade | TCR-based therapy targeting novel senescence/cancer protein | HPV+ / RB- | ■ | | | IND-enabling studies in 2H21 | Our Programs The company's portfolio is led by CLN-081 for NSCLC, with key immuno-oncology candidates CLN-049, CLN-619, CLN-617, and CLN-978 - CLN-081: An orally available, irreversible EGFR inhibitor for NSCLC with EGFRex20ins mutations, showing partial responses in 10 of 25 patients in Phase 1/2a with a manageable safety profile[41][42][70] - CLN-049: A humanized bispecific antibody targeting FLT3 and CD3 for AML, demonstrating potent antitumor activity in preclinical studies[78] - CLN-619: A MICA/B-targeted monoclonal antibody designed to stimulate NK and T cell responses against solid tumors, with an IND submission planned for Q2 2021[100][101] - CLN-617 (AMBER platform): A tumor-retained cytokine fusion protein designed to minimize systemic toxicity, with an IND submission expected in 2022[134][135] - CLN-978: A half-life extended, single-chain bispecific antibody engaging CD19 and CD3 for B-cell malignancies[155] Competition The company faces substantial competition from major pharmaceutical and biotechnology companies across its pipeline, including for CLN-081, CLN-049, and CLN-619 - The biotechnology and pharmaceutical industries are characterized by rapid technological evolution, intense competition, and a strong emphasis on intellectual property[168] - Competitors for CLN-081 in NSCLC with EGFRex20ins mutations include Spectrum's poziotinib, Takeda's mobocertinib, and Johnson & Johnson's amivantamab[171] - Competitors for CLN-049 in AML include companies developing bispecifics targeting CD3/CD33, CD123, and FLT3[173] - Competitors for CLN-619 (MICA/B target) include Innate Pharma, CanCure LLC, Genentech, Novartis, and Bristol-Myers Squibb, with none known to be in clinical development[172] License Agreements The company holds key license agreements for CLN-081 (Taiho, Zai Lab), CLN-049 (DKFZ/Tübingen), and CLN-617 (MIT) - Taiho License (CLN-081): Cullinan Pearl obtained exclusive worldwide rights (excluding Japan) from Taiho Pharma, involving a $2.5 million upfront fee and potential milestones up to $154.5 million plus royalties[178][180] - Zai Lab Sublicense (CLN-081): Cullinan Pearl granted Zai Lab exclusive Greater China rights for a $20.0 million upfront fee and potential milestones up to $211.0 million plus royalties[185][188] - DKFZ/Tübingen License (CLN-049): Cullinan Florentine obtained an exclusive worldwide license for a $600,000 upfront fee and potential milestones up to $28 million plus royalties[192][194][195] - MIT License (CLN-617/AMBER): Cullinan Amber obtained an exclusive worldwide license from MIT for a $50,000 upfront fee and potential milestones up to $7 million for the first product plus royalties[199][200][201] Intellectual Property Cullinan's patent portfolio, as of February 2021, includes 12 patent families with patents expiring between 2034 and 2041 - The patent portfolio for the lead candidate, CLN-081, includes five patent families covering composition of matter and methods of use, with the primary composition patent expected to expire in 2034[215] - The portfolio for CLN-619 includes three owned patent families, with patents, if issued, expected to expire in 2039 or later[216] - The portfolio for CLN-049 includes one in-licensed patent family, with patent applications that, if issued, are expected to expire in 2039[217] Manufacturing Cullinan employs a virtual manufacturing model, relying entirely on third-party CMOs for all supply, including single-source providers for CLN-049 and CLN-619 - The company does not own or operate any GMP manufacturing facilities and relies on third-party CMOs for all manufacturing, packaging, and distribution[221] - Drug substance for CLN-049 and CLN-619 is sourced from WuXi Biologics and Abzena, with sufficient supply obtained to begin planned clinical trials[224] Governmental Regulation The company's products are subject to extensive regulation by the FDA and international authorities, requiring comprehensive data for approval via NDA or BLA, with potential for expedited pathways - Product candidates require FDA approval via an NDA (for drugs like CLN-081) or a BLA (for biologics like CLN-049 and CLN-619) before U.S. marketing[229] - The development process involves extensive preclinical studies (GLP), IND submission, and multi-phase clinical trials (GCP) to establish safety and efficacy[229][231] - The company may seek expedited development pathways such as Fast Track, Breakthrough Therapy, and Accelerated Approval to potentially speed up review for serious conditions[260] - In the European Union, medicinal products require a marketing authorization (MA) via centralized or national procedures, with Brexit impacting the UK regulatory framework[317][318][328] Risk Factors The company faces significant financial, development, operational, and external risks, including limited operating history, reliance on lead candidates, and third-party dependencies - Financial Risks: The company has a limited operating history, incurred $59.5 million in losses in 2020, and requires substantial additional funding[339][344][352] - Development Risks: The business is substantially dependent on its lead candidates CLN-081, CLN-049, and CLN-619, with failure or delays materially harming the company[408] - Operational Risks: The company relies on a novel hub-and-spoke model and outsources nearly all functions to third parties, creating management and disruption risks[362][385] - Commercial Risks: The company faces substantial competition, and approved products may not gain market acceptance or secure adequate reimbursement[448][452] - External Risks: The COVID-19 pandemic may adversely impact business operations, including preclinical studies and clinical trial timelines[662][663] Unresolved Staff Comments There are no unresolved staff comments - None[725] Properties The company's corporate headquarters is in Cambridge, MA, subleasing 7,531 square feet of office space until June 2024 - The company subleases 7,531 square feet of office space in Cambridge, MA, with the lease expiring June 30, 2024[726] Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[727] Mine Safety Disclosures This item is not applicable to the company - Not applicable[729] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock began trading on Nasdaq in January 2021, and it does not anticipate paying dividends, with its IPO raising approximately $264.7 million in net proceeds - The company's common stock began trading on Nasdaq under the symbol "CGEM" on January 8, 2021[732] - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings for business development[734] - The initial public offering in January 2021 generated net proceeds of approximately $264.7 million[747] Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a net loss of $59.5 million in 2020, driven by increased R&D and G&A expenses, but expects sufficient capital to fund operations through 2024 with IPO proceeds Results of Operations (2019 vs. 2020) | (in thousands) | Year Ended 2019 | Year Ended 2020 | | :--- | :--- | :--- | | Research and development | $16,788 | $43,211 | | General and administrative | $5,482 | $17,124 | | Total operating expenses | $22,270 | $60,335 | | Net loss | ($21,654) | ($59,458) | Research & Development Expenses by Program (2019 vs. 2020) | (in thousands) | Year Ended 2019 | Year Ended 2020 | | :--- | :--- | :--- | | Cullinan Mica (CLN-619) | $0 | $10,352 | | Cullinan Florentine (CLN-049) | $909 | $9,659 | | Cullinan Pearl (CLN-081) | $7,002 | $8,253 | | Cullinan Apollo (VK-2019) | $4,133 | $2,166 | | Cullinan Amber (CLN-617) | $281 | $720 | | Total Asset Subsidiaries expenses | $12,325 | $31,150 | - The increase in R&D expenses was primarily due to the acquisition of CLN-619, increased pre-clinical and CMC costs for CLN-049, and increased trial enrollment for CLN-081[791] - The increase in G&A expenses was primarily due to increased headcount and equity-based compensation granted in Q4 2020[794] - As of December 31, 2020, the company had $210.2 million in cash and investments, expected to fund operations through 2024 with IPO proceeds[797] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cullinan Oncology is not required to provide this information - The company is a smaller reporting company and is not required to provide this information[842] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2019 and 2020, including balance sheets, statements of operations, and cash flows Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2019 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $63,250 | $168,198 | | Short term investments | $35,380 | $42,008 | | Total Assets | $100,461 | $214,708 | | Total liabilities | $2,596 | $14,394 | | Total members' deficit | ($39,909) | ($76,338) | Consolidated Statements of Cash Flows Highlights (Year Ended Dec 31) | (in thousands) | 2019 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,897) | ($29,772) | | Net cash used in investing activities | ($35,400) | ($5,420) | | Net cash provided by financing activities | $85,715 | $140,140 | | Net increase in cash and cash equivalents | $29,418 | $104,948 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with the company's accountants on accounting or financial disclosure - There has been no change of accountants nor any disagreements with accountants[844] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2020, with no material changes reported - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[846] - A management report on internal control over financial reporting is not included due to the transition period for newly public companies[847] Other Information There is no other information to report - None[850] PART III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's 2021 definitive Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[853] Executive Compensation Information for this item is incorporated by reference from the company's 2021 definitive Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[854] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's 2021 definitive Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[855] Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's 2021 definitive Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[856] Principal Accounting Fees and Services Information for this item is incorporated by reference from the company's 2021 definitive Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[857] PART IV Exhibits, Financial Statement Schedules This section lists the financial statements and provides an index of exhibits filed as part of the Annual Report - This item provides an index to the consolidated financial statements and a list of exhibits filed with the report[860][861] Form 10-K Summary The company has elected not to include a summary - The Company has elected not to include summary information[862]