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 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 first approved therapy is PALSONIFY™ (paltusotine), which has been approved by the U.S. Food and Drug Administration (“FDA”) in the United States (“U.S”), for the treatment of acromegaly. Additionally, PALSONIFY is under review by regulatory agencies in Europe for the treatment of acromegaly. Paltusotine is also in clinical development for treatment of carcinoid syndrome associated with neuroendocrine tumors. Atumelnant 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 inone international business segment, which is the discovery, development and commercialization of novel therapeutics for endocrine 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”).

Our condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, and have been prepared in conformity with GAAP. All intercompany transactions and balances have been eliminated.

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 building the infrastructure necessary for commercial operations. The Company has a limited operating history and the sales and income potential of the Company’s business and market are unproven. While the Company has received FDA approval for its lead product, the Company may continue to incur substantial operating losses even as it generates revenue from PALSONIFY, and a 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 $1.3 billion as of September 30, 2025. As of September 30, 2025, the Company had $1.1 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’s future long-term liquidity requirements will be substantial and will depend on many factors, including the Company’s ability to effectively commercialize PALSONIFY. 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 future product sales, 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 September 30, 2025 and December 31, 2024 was $2.9 million and $0.8 million, respectively, and was included in other liabilities in the Company’s condensed consolidated balance sheets. As of September 30, 2025 and December 31, 2024, the deferred compensation asset related to cash deferrals of $2.9 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 liability balance are recorded to expense and reflected within operating expenses of our condensed consolidated statements of operations 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 of this guidance and expects the adoption to affect disclosures only, with no material impact on the condensed consolidated financial statements.

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 September 30, 2025 and December 31, 2024 (in thousands):

As of September 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 September 30, 2025 and December 31, 2024 (in thousands):

The Company reviewed its investment holdings as of September 30, 2025 and December 31, 2024 and determined that any 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 it is 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 nine months ended September 30, 2025 and 2024. Accrued interest receivable on available-for-sale securities was $6.3 million and $8.3 million at September 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 September 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 were no transfers into or out of Level 3 during the nine months ended September 30, 2025 and 2024.

4. Balance Sheet Details

Prepaid expenses and other assets

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

Property and Equipment, net

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

Accounts Payable and Accrued Expenses

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

5. Operating Leases

The Company's lease obligations primarily consist of an operating lease 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”). The Company's prior operating lease for a facility in San Diego, California, entered into in 2018 (the “2018 Lease”), expired in August 2025.

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, both of which are included as restricted cash in the accompanying condensed consolidated balance sheets. The $0.5 million letter of credit related to the 2018 Lease was not released as of September 30, 2025 and is classified as current restricted cash in the accompanying condensed consolidated balance sheets. The lessor of the 2022 Lease is entitled to draw on the $0.8 million letter of credit in the event of any default by the Company under the terms of the lease.

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

Operating lease cost was $2.1 million and $6.5 million for the three and nine months ended September 30, 2025, respectively. Operating lease cost was $2.1 million and $6.4 million for the three and nine months ended September 30, 2024, respectively. Short-term lease expenses for the third 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:

(1)Reflects only the Company’s 2022 Lease as the 2018 Lease expired in August 2025.

Supplemental cash flow information related to leases was as follows (in thousands):