Crinetics Pharmaceuticals, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

Crinetics Pharmaceuticals, Inc. (the “Company”) is a clinical-stage pharmaceutical company incorporated in Delaware in 2008 and based in San Diego, California. The Company is focused on the discovery, development, and commercialization of novel therapeutics for endocrine diseases and endocrine-related tumors. The Company's lead product candidate is paltusotine, which is under review by the U.S. Food and Drug Administration in the United States for the treatment of acromegaly as PALSONIFYTM, under review by regulatory agencies in Europe for the treatment of acromegaly, and in clinical development for treatment of carcinoid syndrome associated with neuroendocrine tumors. The Company's second product candidate is atumelnant, which is in clinical development for congenital adrenal hyperplasia (“CAH”) and ACTH-Dependent Cushing’s Syndrome (“ADCS”). The Company is advancing additional product candidates through preclinical discovery and development studies.

The Company operates in one international business segment, which is the discovery, development and commercialization of novel therapeutics for endo crine diseases and endocrine-related tumors. Refer to Note 11, Segment Reporting, for further discussion on the Company's segment reporting.

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements are unaudited, and reflect all adjustments which are, in the opinion of management, of a normal recurring nature and necessary for a fair statement of the results for the interim periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company's condensed consolidated balance sheet for the year ended December 31, 2024 was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The interim results presented herein are not necessarily indicative of the results expected for the full fiscal year or any other interim period. The Company's condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission ("SEC") on February 27, 2025 ("FY 2024 Form 10-K").

Reclassifications

Certain prior period amounts within the condensed consolidated statements of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on the net change in cash.

Liquidity

From inception, the Company has devoted substantially all of its efforts to drug discovery and development, conducting preclinical studies and clinical trials, and pre-commercial infrastructure build-out and related activities. The Company has a limited operating history and the sales and income potential of the Company’s business and market are unproven. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. The Company has experienced net losses and negative cash flows from operating activities since its inception and has an accumulated deficit of $1.2 billion as of June 30, 2025.

As of June 30, 2025, the Company had $1.2 billion in cash, cash equivalents and investment securities, which the Company believes is sufficient to meet its funding requirements for at least the next 12 months.

The Company expects to continue to incur net losses for the foreseeable future and believes it may need to raise substantial additional capital to accomplish its business objectives over the next several years. The Company plans to continue to fund its losses from operations and capital funding needs through a combination of equity offerings, debt financings or other sources as may be required, including potential collaborations, licenses and other similar arrangements. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and prospects. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future.

Significant Accounting Policies

There have been no material changes to the Company's significant accounting policies from the FY 2024 Form 10-K, except as follows:

Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan that provides directors and certain employees the ability to defer receipt of current cash compensation and vested restricted stock units until a later date. The assets are held in a trust (the “Rabbi Trust”) and participants have the option to invest their cash deferrals in a fixed income investment, a defined set of mutual funds, and, with respect to deferrals of restricted stock units, in Company common stock. The Company has made an accounting policy election to assess instruments held in the Rabbi Trust at the instrument level. The assets of the Rabbi Trust are subject to the claims of creditors in the event that the Company becomes insolvent.

The deferred compensation liability related to cash deferrals as of June 30, 2025 and December 31, 2024 was $2.3 million and $0.8 million, respectively, and was included in other liabilities in the Company’s condensed consolidated balance sheets. As of June 30, 2025 and December 31, 2024, the deferred compensation asset related to cash deferrals of $2.3 million and $0.8 million, respectively, was included in prepaid expenses and other assets, net of current portion in the Company’s condensed consolidated balance sheets. Changes in this liabilities balance are recorded to expense and reflected within operating expenses of our condensed consolidated statements ofoperations and comprehensive loss. Changes in the fair value of these assets are recorded within other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Investments in shares of the Company's common stock are included as stock held in trust, in the Company’s condensed consolidated balance sheets. The participant's deferred compensation liability attributable to the participants' investments in shares of the Company's common stock are included within common stock and paid-in capital in the Company’s condensed consolidated balance sheets.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The estimates in the Company’s condensed consolidated financial statements include, but are not limited to, recoverability and useful lives of long-lived assets, accruals, valuation of stock-based awards, fair values of financial instruments, and revenue recognition.

Recent Accounting Pronouncements Not Yet Adopted

ASU 2023-09

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its condensed consolidated financial statements and accompanying notes.

ASU 2024-03

In November 2024, the FASB issued ASU No. 2024-03, Income Statement–Reporting Comprehensive Income–Expense disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses for public business entities ("PBEs"). ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its condensed consolidated financial statements and accompanying notes.

2. INVESTMENT SECURITIES

The Company reports its available-for-sale investment securities at their estimated fair values. The following is a summary of the available-for-sale investment securities held by the Company as of June 30, 2025 and December 31, 2024 (in thousands):

As of June 30, 2025 and December 31, 2024, available-for-sale investment securities by contractual maturity were as follows (in thousands):

The following is a summary of the available-for-sale investment securities by length of time in a net loss position as of June 30, 2025 and December 31, 2024 (in thousands):

The Company reviewed its investment holdings as of June 30, 2025 and December 31, 2024 anddetermined that the decrease in fair value is attributable to changes in interest rates and not credit quality, and as the Company does not intend to sell the investments and itis not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. Therefore, there wereno allowances for credit losses.

Realized gains (losses) were immaterial for the three and six months ended June 30, 2025 and 2024. Accrued interest receivable on available-for-sale securities was $8.4 million and $8.3 million at June 30, 2025 and December 31, 2024, respectively.

3. FAIR VALUE MEASUREMENTS

Fair value measurements may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curves, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, and broker and dealer quotes, as well as other relevant economic measures.

Financial assets measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 were as follows (in thousands):

(1)Consists of mutual fund investments held in the Rabbi Trust related to the Company’s non-qualified deferred compensation plan.

The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There wereno transfers into or out of Level 3 during thesix months ended June 30, 2025 and 2024.

4. BALANCE SHEET DETAILS

Prepaid expenses and other assets consisted of the following (in thousands):

Property and equipment, net consisted of the following (in thousands):

Accounts payable and accrued expenses consisted of the following (in thousands):

5. OPERATING LEASES

The Company's lease obligations primarily consist of operating leases for its headquarters in San Diego, California, entered into in 2022 and expiring on the date immediately preceding the one hundred thirty-seventh (137th) month anniversary of the lease payment start date (the "2022 Lease"), and for a facility in San Diego, California, expiring in August 2025 (the "2018 Lease").

Under the terms of the 2018 Lease and 2022 Lease, the Company provided the lessors with irrevocable letters of credit in the amounts of $0.5 million and $0.8 million, respectively, which are included in restricted cash and restricted cash, net of current portion, respectively, in the accompanying condensed consolidated balance sheets. The lessors are entitled to draw on the letters of credit in the event of any default by the Company under the terms of the leases.

As of June 30, 2025, the Company's future minimum payments under non-cancellable operating leases were as follows (in thousands):

Operating lease cost was $2.2 million and $4.4 million for thethree and six months ended June 30, 2025, respectively. Operating lease cost was $2.1 million and $4.3 million for thethree and six months ended June 30, 2024, respectively. Short-term lease expenses for the second quarters of 2025 and 2024 were not significant.

The Company's contracts do not provide readily determinable implicit rates, and as such, the Company used the estimated incremental borrowing rate based on the information available at the adoption, commencement, or remeasurement date. Remaining lease terms and discount rates for the Company's operating leases are as follows:

Other information related to leases was as follows (in thousands):

6. COMMI TMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may be subject to various claims and suits arising in the ordinary course of business. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position or results of operations.

7. REVENUE RECOGNITION

Sanwa Kagaku Kenkyusho Co., Ltd

On February 25, 2022, the Company and Sanwa Kagaku Kenkyusho Co., Ltd. ("Sanwa"), entered into a license agreement (the “Sanwa License”) whereby the Company granted Sanwa an exclusive license to develop and commercialize paltusotine in Japan.

In exchange, the Company received a $13.0 million nonrefundable, upfront payment and will be eligible to receive up to an additional $25.5 million in milestone payments related to the achievement of certain development, regulatory and commercial goals. In addition, upon market approval of paltusotine in Japan, the Company will be eligible to receive certain sales-based royalties.

Initially, the Company determined that the transaction price amounted to the upfront payment of $13.0 million. The Company determined that its performance obligations under the Sanwa License comprised the license and data exchange. The control of the license was transferred to Sanwa at the inception of the contract and the Company does not have an ongoing performance obligation to support or maintain the licensed intellectual property. Revenue allocated to the data exchange obligation is recognized over time using the cost-to-cost measure as this method represents a faithful depiction of progress toward the ongoing paltusotine studies in the U.S. and related data transfer. Revenue is recognized on a gross basis as the Company is the principal. As there have been no sales to date, no sales-based milestones or royalties were recognized to date. Further, using the most-likely-method, the other developmental milestone payments are considered fully constrained.

During the six months ended June 30, 2024, the Company achieved a $1.0 million milestone for the first indication of the development milestones. As of June 30, 2024, the Company updated its estimated transaction price to $14.0 million and recorded a cumulative catch-up adjustment of $0.4 million.

Deferred revenue consisted of the following (in thousands):

During the three and six months ended June 30, 2025, $0.6 million and $1.0 million, respectively, of the $14.0 million estimated transaction price was recognized as revenues in the accompanying condensed consolidated statements of operations and comprehensive loss, all of which were included in the fiscal year 2024 deferred revenue balance. During thethree and six months ended June 30, 2024, $0.3 million and $0.9 million, respectively, of the $14.0 million estimated transaction price was recognized as revenues in the accompanying condensed consolidated statements of operations and comprehensive loss, of which $0.3 million and $0.5 million, respectively, was included in the fiscal year 2023 deferred revenue balance. Deferred revenues are expected to be recognized over the duration of certain paltusotine studies conducted by the Company.

On June 14, 2022, the Company and Sanwa, entered into a clinical supply agreement (the "Sanwa Clinical Supply Agreement") whereby the Company is responsible for manufacturing and supplying certain materials to Sanwa for specified activities under the During each of the three and six months ended June 30, 2025 and each of the three and six months ended June 30, 2024, $0.4 million and $0.1 million, respectively, was recognized as revenues in the accompanying condensed consolidated statements of operations and comprehensive loss related to the Sanwa Clinical Supply Agreement.

Cellular Longevity, Inc., doing business as Loyal

On March 24, 2023, the Company granted Cellular Longevity Inc., doing business as Loyal ("Loyal") an exclusive license to develop and commercialize CRN01941 for veterinary use. In return, the Company received a $0.1 million upfront payment and Loyal preferred stock valued at $2.0 million. The Company may also earn single-digit sales-based royalties if the product is approved.

No revenue was recognized for the three and six months ended June 30, 2025 and 2024. As of June 30, 2025, the shares of Loyal preferred stock issued and to be issued to the Company valued at $2.0 million is included in prepaid expense and other assets, net of current portion, in the accompanying condensed consolidated balance sheets. The Loyal preferred stock does not have a readily determinable fair value and is recorded at cost less impairment. The Company assesses equity securities without a readily determinable fair value for changes in observable prices each period, noting none for the three and six months ended June 30, 2025.

8. STOCKHOLDERS’ EQUITY

Stock Offerings

On March 1, 2024, the Company completed a private placement of 8,333,334 shares of its common stock at a price of $42.00 per share (the "Private Placement"). Net proceeds from the Private Placement were approximately $335.5 million, after offering costs of approximately $14.5 million. On March 19, 2024, the Company registered for resale the shares issued and sold in the Private Placement, pursuant to the Registration Rights Agreement entered into with the Purchasers, dated February 27, 2024.

On October 10, 2024, the Company completed an underwritten public offering of 11,500,000 shares of its common stock at a price to the public of $50.00 per share, which included 1,500,000 shares of common stock issued pursuant to the underwriters' option to purchase additional shares. Net proceeds from the offering were approximately $542.8 million, after underwriting discounts and commissions and other offering costs of approximately $32.2 million.

ATM Offerings

On August 13, 2019, the Company entered into a Sales Agreement (as amended, the “2019 Sales Agreement”) with SVB Leerink LLC and Cantor Fitzgerald & Co. (collectively, the “Sales Agents”), under which the Company could, from time to time, sell up to $150.0 million of shares of its common stock through the Sales Agents (the “2019 ATM Offering”). The 2019 ATM Offering was terminated upon the filing by the Company of its Registration Statement on Form S-3ASR on June 21, 2024.

On June 21, 2024, the Company entered into a Sales Agreement (the “2024 Sales Agreement”) with the Sales Agents under which the Company may, from time to time, sell up to $350.0 million of shares of its common stock through the Sales Agents (the “2024 ATM Offering”).

During the three and six months ended June 30, 2025, and as of date of this report, no shares of common stock have been issued pursuant to the 2019 ATM Offering or the 2024 ATM Offering.

9. EQUITY INCENTIVE PLANS

2021 Employment Inducement Incentive Award Plan

In December 2024, the Company amended the Company's 2021 Employment Inducement Incentive Award Plan (the "2021 Inducement Plan") to increase the number of shares of the Company’s common stock available for future issuance under the 2021 Inducement Plan to 9,500,000 shares. As of June 30, 2025,2,379,126 shares of common stock were available for future issuance under the 2021 Inducement Plan.

2018 Incentive Award Plan

As of June 30, 2025,5,232,485 shares of common stock were available for future issuance under the Company's 2018 Incentive Award Plan (the "2018 Plan").

The 2018 Plan contains a provision that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2028, in an amount equal to the lesser of: (i)5% of the aggregate number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding calendar year, or (ii) such lesser amount determined by the Company. Under this evergreen provision, on January 1, 2025, an additional 4,646,320 shares became available for future issuance under the 2018 Plan.

2018 Employee Stock Purchase Plan

As of June 30, 2025,2,865,513 shares of common stock were available for issuance under the Company's 2018 Employee Stock Purchase Plan (the "ESPP").

The ESPP contains a provision that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2028, in an amount equal to the lesser of: (i)1% of the aggregate number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding calendar year, or (ii) such lesser amount determined by the Company. Under this evergreen provision, on January 1, 2025, an additional 929,264 shares became available for future issuance under the ESPP.

Stock Awards

Stock Options

Activity under the Company’s stock option plans during thesix months ended June 30, 2025 was as follows:

Restricted Stock Units

The Company’s restricted stock unit ("RSU") activity during thesix months ended June 30, 2025, was as follows:

Employee Stock Purchase Plan

During the six months ended June 30, 2025, the Company issued approximately 115,000 shares of our common stock under the ESPP. The shares were purchased by employees at an average purchase price of $25.14 per share, resulting in proceeds to us of approximately $2.9 million.

Stock-Based Compensation Expense

Stock-based compensation expense for the equity awards issued by the Company to employees and non-employees for the periods presented below was as follows (in thousands):

A summary of the Company's total unrecognized stock-based compensation expense, as of June 30, 2025, is as follows:

10. INVESTMENT IN RADIONETICS

In October 2021, the Company licensed its radiotherapeutics technology to Radionetics Oncology, Inc. in exchange for 50,500,000 shares of Radionetics' common stock (64% initial stake) and a warrant to maintain up to 22% equity in Radionetics on a fully diluted basis.

In August 2023, the Company participated in a refinancing transaction, exercising the warrant to purchase 3,407,285 shares of Radionetics common stock, exchanging 32,344,371 shares of Radionetics common stock for Radionetics preferred stock, and investing $5.0 million for an additional 14,404,656 shares of Radionetics preferred stock. The Radionetics license was also amended to include up to $15.0 million in new sales milestones.

In June 2024, the Radionetics license was amended to reduce development targets, reverting certain rights to the Company, and the Company is eligible to receive total potential sales milestones in excess of $300.0 million and single-digit royalties on net sales. In July 2024, Radionetics formed a strategic partnership with Eli Lilly and Company ("Lilly"), receiving a $140 million upfront payment and granting Lilly the exclusive right to acquire Radionetics for $1.0 billion.

Although Radionetics is a variable interest entity ("VIE"), the Company determined it is not the primary beneficiary and does not consolidate Radionetics’ results due to lack of control over key decisions, which rest with Radionetics’ independent board and management. As of June 30, 2025, the Company held a 25% ownership in Radionetics consisting of common and preferred stock and accounts for its investment under the equity method. The investment asset was previously written down to zero. No equity method losses were recorded for the three and six months ended June 30, 2025 and $0.5 million in losses were recorded during the same period in 2024.

R. Scott Struthers, Ph.D., the Company’s President and Chief Executive Officer, serves as chairman of the Radionetics board of directors. Pursuant to such arrangement, Dr. Struthers receives consideration in the form of both equity and a $50,000 annual retainer for his service as a board member of Radionetics. As of June 30, 2025, Dr. Struthers has an approximately 1.3% ownership stake in Radionetics, consisting of common stock. Reimbursements from Radionetics were immaterial during the three and six months ended June 30, 2025 and 2024.

11. SEGMENT REPORTING

The Company operates in asingle reportable segment. The chief operating decision maker ("CODM"), its founder and chief executive officer, assesses performance based on condensed consolidated net loss as reported on the condensed consolidated statement of operations and comprehensive loss, supplemented by certain additional significant expense details reflected in the table below. There have been no changes in the determination of segmentation or the measurements used to determine reported segment loss or segment total assets discussed in the Company's FY 2024 Form 10-K.

Segment revenue and significant segment expenses which are regularly reported to the CODM are included within the table below and are reconciled to condensed consolidated net loss:

(1)Other research and development is comprised of non-personnel related research and development indirect costs incurred for the benefit of multiple research and development programs, including depreciation, and other facility-based expenses, such as rent expense.

12. NET LOSS PER SHARE

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Dilutive common stock equivalents are comprised of common stock subject to repurchase and stock options outstanding under the Company’s stock option plan. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities on loss per share would be antidilutive.

Potentially dilutive securities (in common stock equivalent shares) not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in thousands):