Crinetics Pharmaceuticals Inc

None.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Regist ered Public Accounting Firm

Stockholders and Board of Directors

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Crinetics Pharmaceuticals, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 28, 2024 expressed an unqualified opinion.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Clinical Trial Accruals

As described in Notes 2 and 5 to the consolidated financial statements, clinical trial activities are accrued and expensed based on estimates of the period in which services and efforts provided by contract research organizations (“CROs”) and other third parties. Estimates are determined by reviewing cost information provided by CROs, other third-party vendors and internal clinical personnel, and contractual arrangements with CROs and the scope of work to be performed. As of December 31, 2023, the Company recorded $5.5 million in clinical trial accruals, which was included in accounts payable and accrued expenses on the balance sheet.

We identified the estimation of clinical trial accruals as a critical audit matter. Management’s judgment was required in estimating the progress of services and the associated costs incurred used to determine the accrued liabilities for clinical trial expenses. Auditing clinical trial accruals involved especially challenging auditor judgment due to the nature and extent of audit effort required to address the matter.

The primary procedures we performed to address this critical audit matter included:

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Testing management’s process for estimating clinical trial accruals by: (i) obtaining and inspecting certain agreements and amendments, and (ii) confirming total clinical costs incurred and total amounts billed with certain third-party vendors.

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Testing the completeness of the Company’s clinical trial accruals by: (i) evaluating internal materials and publicly available information (such as press releases and public databases that track clinical trials), (ii) inquiring of clinical personnel to gain an understanding of the status of certain on-going clinical trials, and (iii) testing invoices received after year-end for certain third-party vendors.

Determination of the Incremental Borrowing Rate for an Operating Lease

As discussed in Notes 2 and 6 to the consolidated financial statements, in 2022, the Company entered into a lease agreement for laboratory and office space (the “2022 Lease”). The 2022 Lease commenced in 2023 when the building was ready and available for its intended use. The Company recorded an operating lease right-of-use asset and corresponding operating lease liability in connection with the 2022 Lease upon the accounting commencement date of the arrangement. The Company’s estimated incremental fully collateralized borrowing rate of 8.6% (the Incremental Borrowing Rate, or “IBR”) was used in determining the present value of lease payments as the 2022 Lease does not have a stated rate, and the implicit rate was not readily determinable. The IBR was determined using a synthetic credit rating analysis.

We identified the determination of the IBR for the 2022 Lease as a critical audit matter. Significant judgment was required by management to develop this IBR. Auditing the estimated IBR involved especially challenging auditor judgment due to the nature and extent of audit effort required to address the matter, including the extent of specialized skill and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

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Utilizing personnel with specialized skills and knowledge in valuation to assist in: (i) developing an independent synthetic credit rating of the Company, (ii) identifying market interest rates based on the determined rating and the applicable lease terms, and (iii) developing an independent estimate of a fully collateralized IBR on the accounting commencement date of the 2022 Lease.

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Evaluating the impact to the operating lease right-of-use asset and corresponding operating lease liability by comparing the Company’s IBR to our independent IBR.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2016.

February 28, 2024