Crinetics Pharmaceuticals, Inc.

Current report

Risks Related to the Merger

Current report

The Merger is subject to certain closing conditions, including the receipt of consents and approvals from governmental authorities, which may impose unexpected delays in the completion of the Merger, or the Merger may not be completed at all.

Current report

The Merger is currently expected to close during the third quarter of 2026, assuming that all of the conditions in the Merger Agreement are satisfied or waived. The Merger Agreement provides that either we or Vertex may terminate the Merger Agreement if the Merger has not occurred by January 6, 2027, subject to automatic extension for three months under specified circumstances. Certain events may delay the completion of the Merger or result in a termination of the Merger Agreement. Some of these events are outside the control of either party. In particular, completion of the Merger requires the expiration or termination of the applicable waiting period under the HSR Act, receipt of any required foreign regulatory clearances, receipt of the Company Shareholder Approval and the satisfaction or waiver of the other closing conditions set forth in the Merger Agreement.

Current report

If the Company Shareholder Approval is not obtained at a duly convened special meeting of our shareholders, including any adjournment or postponement thereof, either we or Vertex may terminate the Merger Agreement. If the Merger Agreement is terminated under specified circumstances, including if we terminate the Merger Agreement to enter into a definitive agreement with respect to a “Superior Company Proposal,” as defined in the Merger Agreement, if Vertex terminates the Merger Agreement following an “Adverse Recommendation Change” or an “Intervening Event Adverse Recommendation Change,” each as defined in the Merger Agreement, or if the Merger Agreement is terminated under certain specified circumstances and prior to such termination a “Company Takeover Proposal,” as defined in the Merger Agreement, is proposed or announced or becomes known to our Board of Directors (and is not withdrawn) and we consummate a transaction involving a Company Takeover Proposal (or enter into a definitive agreement for such a transaction that is subsequently consummated) within twelve months of such termination, we may be required to pay a termination fee of approximately $350.5 million to Vertex. We may incur significant additional costs in connection with any delay in completing the Merger or termination of the Merger Agreement, in addition to significant transaction costs, including legal, financial advisory, accounting and other costs we have already incurred. We cannot provide any assurance that the conditions to the completion of the Merger will be satisfied or waived or that any adverse change, effect, event, development, condition, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement will not occur, and we cannot provide any assurances as to whether or when the Merger will be completed on the terms or timeline set forth in the Merger Agreement or at all.

Current report

Failure to complete the Merger in a timely manner or at all could materially and adversely affect our stock price and future business and financial results.

Current report

We can provide no assurance that the Merger will occur or that the conditions to the Merger will be satisfied in a timely manner or at all. Also, we can provide no assurance that an adverse change, effect, event, development, condition, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement will not occur. Delays in completing the Merger or the failure to complete the Merger at all could materially and adversely affect our future business and financial results, and, in that event, the market price of our common stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Merger will be completed. If the Merger is delayed for any reason, we will be subject to several risks, including the diversion of management focus and resources from operational matters and other strategic opportunities while working to complete the Merger, any of which could materially and adversely affect our business, financial condition, results of operations, cash flows and stock price. In addition, if the Merger Agreement is terminated in circumstances under which we are required to pay a terminations fee of approximately $350.5 million to Vertex, our business, financial condition and stock price could be materially and adversely affected.

Current report

The pendency of the Merger could materially and adversely affect our business and operations.

Current report

In connection with the pending Merger, some of our current or prospective customers, healthcare providers, patients, payors, suppliers, vendors, contract research organizations, contract manufacturing organizations, clinical trial sites, regulators or other business counterparties may delay or defer decisions concerning their business relationships or transactions with us, which could negatively impact our revenue generation, margins, operating expenses and profitability, regardless of whether the Merger is completed. In addition, under the Merger Agreement, we are restricted from entering into certain transactions and taking certain other specified actions, and are required to conduct our business in all material respects in the ordinary course until the completion of the Merger or the termination of the Merger Agreement. These restrictions, which could be in place for an extended period of time if the completion of the Merger is delayed, could potentially prevent us from pursuing attractive business opportunities that may arise prior to completion of the Merger or from making appropriate changes to our business or organizational structure. This could in turn materially and adversely impact our business, financial condition and results of operations.

Current report

As a result of the pending Merger, our current and prospective employees could experience uncertainty about their future with us or the surviving company. As a result, key employees may depart because of issues relating to such uncertainty or a desire not to remain with Vertex following the completion of the Merger.

Current report

As a result of the pending Merger, our current and prospective employees may experience uncertainty about their future roles with us or with Vertex following the Merger, or decide that they do not want to continue their employment following the completion of the Merger, which may materially adversely affect our ability to retain and hire key personnel and other employees while the Merger is pending. Losses of key personnel could materially harm our business, results of operations, and financial condition. Such adverse effects could also be exacerbated by a delay in the completion of the Merger for any reason, including delays associated with obtaining requisite regulatory approvals. We may also experience challenges in hiring new employees during the pendency of the Merger, or if the Merger Agreement is terminated, such termination could harm our ability to grow our business, execute on our business plans, or enhance our operations.

Current report

Because the consideration to be received by our shareholders in connection with the Merger is a fixed cash amount, our shareholders will not participate in any potential future upside in our business if the Merger is completed.

Current report

Under the Merger Agreement, at the Effective Time, each share of our common stock issued and outstanding immediately prior to the Effective Time, other than certain excluded shares and shares held by shareholders who are entitled to demand, and have properly demanded appraisal rights in respect to their shares under Delaware law, will be canceled and converted into the right to receive the Merger Consideration. The Merger Consideration is a fixed cash amount and will not be adjusted for changes in our business, assets, liabilities, prospects, financial condition or results of operations or for any change in the market price of our common stock before the Merger is completed.

Current report

As a result, if the Merger is completed, our shareholders will not participate in any potential future increase in our value, including any value that could result from future commercial, clinical, regulatory, business or strategic developments. Our shareholders will instead be limited to the right to receive the fixed cash Merger Consideration, without interest, subject to the terms and conditions of the Merger Agreement.

Current report

An adverse judgment in a lawsuit challenging the Merger may prevent the Merger from becoming effective or from becoming effective within the expected timeframe.

Current report

Our shareholders may file lawsuits challenging the Merger or the other transactions contemplated by the Merger Agreement, which may name us and/or our Board of Directors as defendants. We cannot provide any assurance as to the outcome of such lawsuits, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims. One of the conditions to the completion of the Merger is that no injunction by any governmental entity of competent jurisdiction, such as a court, is in effect that prohibits, restrains or makes illegal the consummation of the Merger. As such, if any future legal actions result in an injunction prohibiting the consummation of the Merger, then such injunction may prevent the consummation of the Merger on the agreed terms, within the expected timeframe or at all, any of which could substantially harm our business. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs and divert management’s attention and resources, which could materially and adversely affect the operation of our business.

Current report

We are expected to incur significant costs in connection with the Merger, which may be in excess of those anticipated by us.

Current report

We have incurred and expect to continue to incur costs associated with negotiating and completing the Merger. These costs have been, and will continue to be, substantial. The substantial majority of costs will consist of transaction costs related to the Merger and include, among others, fees paid to financial, legal and accounting advisors, filing fees, proxy solicitation costs, regulatory costs and employee retention and other employment-related costs. Many of these costs will be borne by us even if the Merger is not completed.

Current report

We may also incur costs related to integration planning and other activities in connection with the Merger. We will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Merger. The costs described above, as well as other unanticipated costs and expenses, could materially and adversely affect our results of operations, financial condition and cash flows.

Current report

The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger, which could discourage a potential competing acquiror from making an alternative transaction proposal for greater consideration than Vertex has agreed to pay in the Merger.

Current report

The Merger Agreement contains provisions that preclude our ability to pursue alternatives to the Merger and require us to refrain from soliciting, initiating or knowingly encouraging or knowingly facilitating any inquiries or the making of any competing proposals from third parties or to engage in discussions or negotiations with third parties regarding any competing proposals, subject to certain exceptions. With respect to any unsolicited written, bona fide acquisition proposal that we receive, if it is deemed to be a Superior Company Proposal, Vertex will have an opportunity to offer to modify the terms of the Merger Agreement in response to such proposal before our Board of Directors may withdraw or modify its recommendation to shareholders in response to such acquisition proposal or terminate the Merger Agreement to enter into a definitive agreement with respect to such acquisition proposal. Upon termination of the Merger Agreement under circumstances relating to a Superior Company Proposal, we may be required to pay a termination fee of approximately $350.5 million to Vertex depending on the circumstances giving rise to the termination, which could potentially discourage a third party from making an alternative transaction proposal or may cause such a third party to propose to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee.

Current report

Additionally, if the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger.

Current report

Directors and officers of Crinetics may have interests in the Merger that may be different from, or in addition to, those of our other shareholders, which could have influenced their decisions to support or approve the Merger.

Current report

Certain of our directors and officers have interests in the Merger that may differ from, or that are in addition to, the interests of our shareholders generally. These interests include, among others, the treatment of outstanding equity awards held by our directors and officers, including the acceleration and cash-out of outstanding unvested stock options and restricted stock units under the Merger Agreement, and potential payments and benefits under existing employment, severance, change in control or other arrangements. Our Board of Directors was aware of and considered these interests to the extent that they existed at the time the Board of Directors approved the Merger Agreement.