Crinetics Pharmaceuticals, Inc.

6. Commitments and Contingencies

Litigation

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

7. Revenue Recognition

Product Revenue

Following the regulatory approval in September 2025, we launched PALSONIFY and began recognizing product revenue in the U.S. from the sales to specialty distributors and specialty pharmacies.

The following table summarizes customers that represented 10% or greater of our consolidated gross product revenue:

Collaboration and License Revenue

Sanwa Kagaku Kenkyusho Co., Ltd

In February 2022, we entered into the SKK License, pursuant to which we granted SKK an exclusive license to develop and commercialize paltusotine in Japan. Under the SKK License, SKK is responsible for clinical development and regulatory activities in Japan, and we retain all rights outside Japan. We also granted SKK the right to purchase supply of paltusotine for clinical and commercial requirements at cost plus a pre-negotiated percentage which was a market rate and therefore not a material right.

Pursuant to the SKK License, we received a $13.0 million nonrefundable upfront payment and would be eligible to receive up to $25.5 million in development, regulatory, and commercial milestone payments, as well as sales-based royalties upon market approval in Japan. In 2024, we updated the estimated transaction price to $14.0 million following the achievement of a development milestone. In April 2026, we achieved $1.5 million of development milestones related to SKK's NDA submission in Japan for paltusotine for the treatment of acromegaly. In the second quarter of 2026, we updated the estimated transaction price to $15.3 million.

Our performance obligations under the SKK License comprised the license and data exchange. Control of the license transferred to SKK at contract inception and we do 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 certain ongoing paltusotine studies and related data transfer. Revenue is recognized on a gross basis as we are the principal. Deferred revenues represent the data exchange obligation and are expected to be recognized over the duration of certain paltusotine studies conducted by us.

As of June 30, 2026, no sales-based milestones or royalties have been recognized as there have been no sales of paltusotine in Japan to date, and remaining milestone payments are constrained.

Deferred revenue consisted of the following:

During the three and six months ended June 30, 2026, we recognized $0.2 million and $0.7 million, respectively, of revenue that was included in deferred revenue at December 31, 2025.

Cellular Longevity, Inc., doing business as Loyal

On March 24, 2023, we granted Loyal an exclusive license to develop and commercialize CRN01941, a somatostatin receptor type 2 agonist, for veterinary use. In return, we received a $0.1 million upfront payment and Loyal preferred stock valued at $2.0 million. We may also earn single-digit sales-based royalties if the product is approved.

8. Stockholders’ Equity

Stock Offering

On January 8, 2026, we completed an underwritten public offering of 8,763,000 shares of our common stock at a price to the public of $45.95 per share, which included 1,143,000 shares of common stock issued pursuant to the underwriters' option to purchase additional shares. Net proceeds from the offering were approximately $380 million, after underwriting discounts and commissions and other offering costs.

ATM Offering

Pursuant to the 2024 Sales Agreement, we may, from time to time, sell up to $350.0 million of shares of our common stock through the Sales Agents.

During the six months ended June 30, 2026 and 2025, and as of the date of this Report, no shares of common stock have been issued pursuant to the 2024 Sales Agreement.

9. Equity Incentive Plans

2021 Inducement Plan

As of June 30, 2026,2,147,304 shares of common stock were available for future issuance under the 2021 Inducement Plan.

2018 Plan

As of June 30, 2026,7,578,673 shares of common stock were available for future issuance under our 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 our common stock outstanding on December 31 of the immediately preceding calendar year, or (ii) such lesser amount determined by us. Under this evergreen provision, on January 1, 2026, an additional 4,778,774 shares became available for future issuance under the 2018 Plan.

ESPP

As of June 30, 2026,2,615,128 shares of common stock were available for issuance under our 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 our common stock outstanding on December 31 of the immediately preceding calendar year, or (ii) such lesser amount determined by us. We elected to not increase the number of shares available for issuance under the ESPP on January 1, 2026.

Stock Awards

Stock Options

Our stock option activity during the six months ended June 30, 2026 was as follows:

RSUs

Our RSU activity during the six months ended June 30, 2026, was as follows:

Employee Stock Purchase Plan

During the six months ended June 30, 2026, we issued 158,522 shares of our common stock under the ESPP. The shares were purchased by employees at an average purchase price of $27.01 per share, resulting in proceeds to us of approximately $4.3 million.

Stock-Based Compensation Expense

Stock-based compensation expense for all equity awards is reported in the condensed consolidated statements of operations and comprehensive income (loss) as follows:

A summary of our total unrecognized stock-based compensation expense, as of June 30, 2026, is as follows:

10. Investment In Radionetics

In October 2021, we entered into the Radionetics License with Radionetics, whereby we licensed our radiotherapeutics technology to Radionetics in exchange for 50,500,000 shares of Radionetics' common stock, equivalent to a 64% initial stake, and the Radionetics Warrant, which was exercisable for a number of shares of Radionetics common stock that would allow us to maintain up to 22% equity in Radionetics on a fully diluted basis.

In August 2023, we participated in a refinancing transaction, exercising the Radionetics 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 and revert certain rights to us. Under the amended Radionetics License, we are eligible to receive 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 Lilly, receiving a $140.0 million upfront payment and granting Lilly the exclusive right to acquire Radionetics for $1.0 billion.

Although Radionetics is a VIE, we determined we are not the primary beneficiary and do not consolidate Radionetics’ results due to lack of control over key decisions, which rests with Radionetics’ independent board and management. We account for our investment in Radionetics under the equity method.

As of June 30, 2026, we held a 25% ownership in Radionetics consisting of common and preferred stock. The investment asset was previously written down to zero in the first quarter of 2024 withno gains or losses recorded thereafter.

R. Scott Struthers, Ph.D., our 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 thousand annual retainer for his service as a board member of Radionetics. As of June 30, 2026, Dr. Struthers has an approximately 1.3% ownership stake in Radionetics, consisting of common stock.

11. Segment Reporting

We operate in a single reportable segment. The CODM, our President 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 segments or the measurements used to determine reported segment loss or segment total assets discussed in our FY 2025 Form 10-K.

Segment revenue and significant segment expenses 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.

(2)Other selling, general and administrative expenses is comprised of non-personnel related indirect costs incurred for the benefit of multiple administrative functions, including sales and marketing expenses, facility-related costs, legal and professional fees, insurance costs and costs to operate a public company.

During 2025, we updated the presentation of certain segment expenses. The information presented for the periods ended June 30, 2025 have been updated to conform.

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. 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) excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive for the periods presented are as follows:

13. Subsequent Events

Merger Agreement with Vertex Pharmaceuticals Incorporated

On July 6, 2026, we entered into the Merger Agreement with Vertex and Merger Sub. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub will merge with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Vertex. The Merger Agreement and the Merger were unanimously approved and declared advisable by our Board of Directors, which recommended that our shareholders adopt the Merger Agreement. Subject to the satisfaction or, to the extent permitted by applicable law, waiver of the conditions to closing, the Merger is currently expected to close in the third quarter of 2026.

Under the terms of 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 of their shares under Delaware law, will be canceled and converted into the right to receive the Merger Consideration. Immediately prior to the Effective Time, all outstanding unvested stock options and unvested restricted stock units will become fully vested. At the Effective Time, each outstanding stock option with a per share exercise price less than the Merger Consideration and each outstanding restricted stock unit will be canceled and converted into the right to receive an amount in cash equal to the Merger Consideration (or, in the case of stock options, the difference between the Merger Consideration and the applicable per share exercise price), less any applicable withholding taxes. Any stock option with a per share exercise price equal to or greater than the Merger Consideration will be canceled for no consideration.

The completion of the Merger is subject to various conditions set forth in the Merger Agreement, including the receipt of the Company Shareholder Approval, the expiration or termination of the waiting period under the HSR Act and receipt of any required foreign regulatory clearances, the absence of any legal restraint preventing or prohibiting the Merger, the accuracy of each party's representations and warranties contained in the Merger Agreement (subject to certain materiality and material adverse effect qualifications), performance by each party in all material respects of its obligations under the Merger Agreement and the absence of a “Company Material Adverse Effect,” as defined in the Merger Agreement, that is continuing at the Effective Timer. The completion of the Merger is not subject to a financing condition.

The Merger Agreement contains customary representations, warranties and covenants, including covenants relating to the operations of our business during the period between signing and closing, governmental filings and approvals, preparation and filing of a proxy statement, convening and holding a special meeting of our shareholders, financing cooperation and other matters. The Merger Agreement also contains customary non-solicitation restrictions in respect of alternative business combination transactions, subject to customary exceptions.

The Merger Agreement contains termination rights, including termination rights for each of Vertex and the Company if the Effective Time has not occurred on or before January 6, 2027, subject to automatic extension forthree months under specified circumstances, or if the Company Shareholder Approval is not obtained. The Merger Agreement also provides that, upon termination of the Merger Agreement under specified circumstances, we may be required to pay Vertex a termination fee of approximately $350.5 million.