10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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

Commission File Number: 001-38583

Crinetics Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

26-3744114

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

10222 Barnes Canyon Road, Bldg. #2,

San Diego, California

 

92121

(Address of principal executive offices)

 

(Zip code)



Registrant’s telephone number, including area code: (858) 450-6464

 

Securities registered pursuant to Section 12(b) of the Act:

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 9, 2022, the registrant had 53,752,778 shares of common stock ($0.001 per share par value) outstanding.

 

 

 


 

CRINETICS PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2022

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited):

 

3

 

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

 

3

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021

 

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

 

6

 

 

Notes to Condensed Consolidated Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

31

Item 4.

 

Controls and Procedures

 

31

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

32

Item 1A.

 

Risk Factors

 

32

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

32

Item 3.

 

Defaults Upon Senior Securities

 

32

Item 4.

 

Mine Safety Disclosures

 

32

Item 5.

 

Other Information

 

32

Item 6.

 

Exhibits

 

33

 

2


 

PART I — FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Crinetics Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

62,293

 

 

$

200,695

 

Investment securities

 

 

346,213

 

 

 

133,012

 

Prepaid expenses and other current assets

 

 

7,779

 

 

 

11,013

 

Total current assets

 

 

416,285

 

 

 

344,720

 

Property and equipment, net

 

 

3,152

 

 

 

2,825

 

Operating lease right-of-use asset

 

 

1,697

 

 

 

1,892

 

Derivative asset

 

 

99

 

 

 

68

 

Investment in Radionetics

 

 

 

 

 

1,010

 

Restricted cash

 

 

500

 

 

 

500

 

Total assets

 

$

421,733

 

 

$

351,015

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

17,132

 

 

$

8,468

 

Accrued compensation and related expenses

 

 

5,447

 

 

 

6,588

 

Deferred revenue

 

 

2,543

 

 

 

 

Other current liabilities

 

 

993

 

 

 

939

 

Total current liabilities

 

 

26,115

 

 

 

15,995

 

Operating lease liability, non-current

 

 

2,565

 

 

 

3,074

 

Deferred revenue, non-current

 

 

6,888

 

 

 

 

Unvested stock liability

 

 

 

 

 

2

 

Total liabilities

 

 

35,568

 

 

 

19,071

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par; 10,000 shares authorized; no shares issued
     or outstanding at June 30, 2022 or at December 31, 2021

 

 

 

 

 

 

Common stock and paid-in capital, $0.001 par; 200,000 shares authorized;
    
53,720 shares issued and outstanding at June 30, 2022;
    
47,598 shares issued and 47,597 shares outstanding at December 31, 2021

 

 

742,041

 

 

 

607,581

 

Accumulated other comprehensive income

 

 

(3,619

)

 

 

(382

)

Accumulated deficit

 

 

(352,257

)

 

 

(275,255

)

Total stockholders’ equity

 

 

386,165

 

 

 

331,944

 

Total liabilities and stockholders’ equity

 

$

421,733

 

 

$

351,015

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements.

3


 

Crinetics Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

License revenues

 

$

439

 

 

$

 

 

$

3,570

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

32,995

 

 

 

20,487

 

 

 

61,247

 

 

 

38,071

 

General and administrative

 

 

10,489

 

 

 

5,602

 

 

 

19,195

 

 

 

10,936

 

Total operating expenses

 

 

43,484

 

 

 

26,089

 

 

 

80,442

 

 

 

49,007

 

Loss from operations

 

 

(43,045

)

 

 

(26,089

)

 

 

(76,872

)

 

 

(49,007

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

720

 

 

 

23

 

 

 

913

 

 

 

53

 

Other expense, net

 

 

(81

)

 

 

(29

)

 

 

(64

)

 

 

(42

)

Change in valuation of derivative asset

 

 

31

 

 

 

 

 

 

31

 

 

 

 

Total other expense, net

 

 

670

 

 

 

(6

)

 

 

880

 

 

 

11

 

Loss before equity method investment

 

 

(42,375

)

 

 

(26,095

)

 

 

(75,992

)

 

 

(48,996

)

Loss on equity method investment

 

 

 

 

 

 

 

 

(1,010

)

 

 

 

Net loss

 

$

(42,375

)

 

$

(26,095

)

 

$

(77,002

)

 

$

(48,996

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.81

)

 

$

(0.70

)

 

$

(1.54

)

 

$

(1.40

)

Weighted average shares - basic and diluted

 

 

52,522

 

 

 

37,061

 

 

 

50,130

 

 

 

35,048

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investment securities

 

$

(1,427

)

 

$

(9

)

 

$

(3,237

)

 

$

(15

)

Comprehensive loss

 

$

(43,802

)

 

$

(26,104

)

 

$

(80,239

)

 

$

(49,011

)

 

See the accompanying notes to these unaudited condensed consolidated financial statements.

4


 

Crinetics Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

Common Stock

 

 

Common stock
and Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance at April 1, 2022

 

 

47,801

 

 

$

615,118

 

 

$

(2,192

)

 

$

(309,882

)

 

$

303,044

 

Issuance of common stock, net of $7.8 million of transaction costs

 

 

5,626

 

 

 

117,242

 

 

 

 

 

 

 

 

 

117,242

 

Stock issued under Stock Purchase Plan

 

 

66

 

 

 

813

 

 

 

 

 

 

 

 

 

813

 

Exercise of stock options

 

 

227

 

 

 

1,737

 

 

 

 

 

 

 

 

 

1,737

 

Stock-based compensation

 

 

 

 

 

7,131

 

 

 

 

 

 

 

 

 

7,131

 

Comprehensive loss

 

 

 

 

 

 

 

 

(1,427

)

 

 

 

 

 

(1,427

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(42,375

)

 

 

(42,375

)

Balance at June 30, 2022

 

 

53,720

 

 

$

742,041

 

 

$

(3,619

)

 

$

(352,257

)

 

$

386,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

47,597

 

 

$

607,581

 

 

$

(382

)

 

$

(275,255

)

 

$

331,944

 

Issuance of common stock, net of $7.8 million of transaction costs

 

 

5,626

 

 

 

117,242

 

 

 

 

 

 

 

 

 

117,242

 

Stock issued under Stock Purchase Plan

 

 

66

 

 

 

813

 

 

 

 

 

 

 

 

 

813

 

Vesting of shares subject to repurchase

 

 

1

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Exercise of stock options

 

 

430

 

 

 

3,517

 

 

 

 

 

 

 

 

 

3,517

 

Stock-based compensation

 

 

 

 

 

12,886

 

 

 

 

 

 

 

 

 

12,886

 

Comprehensive loss

 

 

 

 

 

 

 

 

(3,237

)

 

 

 

 

 

(3,237

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(77,002

)

 

 

(77,002

)

Balance at June 30, 2022

 

 

53,720

 

 

$

742,041

 

 

$

(3,619

)

 

$

(352,257

)

 

$

386,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at April 1, 2021

 

 

33,017

 

 

$

339,976

 

 

$

19

 

 

$

(190,515

)

 

$

149,480

 

Issuance of common stock, net of $2.4 million of transaction costs

 

 

4,562

 

 

 

72,558

 

 

 

 

 

 

 

 

 

72,558

 

Stock issued under Stock Purchase Plan

 

 

47

 

 

 

522

 

 

 

 

 

 

 

 

 

522

 

Vesting of shares subject to repurchase

 

 

5

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Exercise of stock options

 

 

49

 

 

 

745

 

 

 

 

 

 

 

 

 

745

 

Stock-based compensation

 

 

 

 

 

4,233

 

 

 

 

 

 

 

 

 

4,233

 

Comprehensive loss

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

(9

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(26,095

)

 

 

(26,095

)

Balance at June 30, 2021

 

 

37,680

 

 

$

418,040

 

 

$

10

 

 

$

(216,610

)

 

$

201,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2021

 

 

33,001

 

 

$

336,508

 

 

$

25

 

 

$

(167,614

)

 

$

168,919

 

Issuance of common stock, net of $2.4 million of transaction costs

 

 

4,562

 

 

 

72,558

 

 

 

 

 

 

 

 

 

72,558

 

Stock issued under Stock Purchase Plan

 

 

47

 

 

 

522

 

 

 

 

 

 

 

 

 

522

 

Vesting of shares subject to repurchase

 

 

8

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Exercise of stock options

 

 

62

 

 

 

802

 

 

 

 

 

 

 

 

 

802

 

Stock-based compensation

 

 

 

 

 

7,639

 

 

 

 

 

 

 

 

 

7,639

 

Comprehensive loss

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(48,996

)

 

 

(48,996

)

Balance at June 30, 2021

 

 

37,680

 

 

$

418,040

 

 

$

10

 

 

$

(216,610

)

 

$

201,440

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements.

5


 

Crinetics Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(77,002

)

 

$

(48,996

)

Reconciliation of net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

12,886

 

 

 

7,639

 

Depreciation and amortization

 

 

455

 

 

 

454

 

Noncash lease expense

 

 

195

 

 

 

163

 

Accretion of purchase discounts and amortization
   of premiums on investment securities, net

 

 

517

 

 

 

170

 

Loss on equity method investment

 

 

1,010

 

 

 

 

Change in valuation of derivative asset

 

 

(31

)

 

 

 

Other, net

 

 

 

 

 

(1

)

Increase (decrease) in cash resulting from changes in:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

3,234

 

 

 

(941

)

Accounts payable and accrued expenses

 

 

8,241

 

 

 

1,901

 

Deferred revenue

 

 

9,431

 

 

 

 

Operating lease liability

 

 

(455

)

 

 

(405

)

Net cash used in operating activities

 

 

(41,519

)

 

 

(40,016

)

Investing activities:

 

 

 

 

 

 

Purchases of investment securities

 

 

(247,572

)

 

 

(2,535

)

Maturities of investment securities

 

 

30,617

 

 

 

55,153

 

Purchases of property and equipment

 

 

(700

)

 

 

(278

)

Net cash (used in) provided by investing activities

 

 

(217,655

)

 

 

52,340

 

Financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of $7.8 million (2022) and $2.4 million (2021) of transaction costs

 

 

117,255

 

 

 

72,558

 

Proceeds from exercise of stock options

 

 

3,517