10-Q 1 cgem-20240930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-39856

CULLINAN THERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

Delaware

81-3879991

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

One Main Street
Suite 1350
Cambridge, MA

02142

(Address of principal executive offices)

(Zip Code)

(617) 410-4650

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

CGEM

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO

The number of shares of the Registrant’s common stock outstanding as of October 31, 2024 was 58,227,593.

 

 

 


 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements (unaudited)

 

1

 

Consolidated Balance Sheets

 

1

 

Consolidated Statements of Operations and Comprehensive Income (Loss)

 

2

 

Consolidated Statements of Stockholders’ Equity

 

3

 

Consolidated Statements of Cash Flows

 

5

 

Notes to the Consolidated Financial Statements

 

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

21

Item 4.

Controls and Procedures

 

21

 

 

 

 

PART II.

OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

22

Item 1A.

Risk Factors

 

22

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

22

Item 3.

Defaults Upon Senior Securities

 

22

Item 4.

Mine Safety Disclosures

 

22

Item 5.

Other Information

 

23

Item 6.

Exhibits

 

23

 

Signatures

 

24

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 10-K") and other filings with the Securities Exchange Commission (the “SEC”), including the following:

the commercial success, cost of development, and timing of the approval of our clinical-stage product candidates;
the initiation, timing, progress, results, and cost of our research and development programs, and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or clinical trials and related preparatory work, and the period during which the results of the trials will become available;
our ability to submit, and obtain clearance of, any global regulatory filings, including investigational new drug applications, on our expected timelines, or at all;
our ability to initiate, recruit, and enroll patients in and conduct our clinical trials at the pace that we project;
our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations, or warnings in the label of any of our product candidates, if approved;
our ability to compete with companies currently marketing therapies or developing product candidates with targets or indications similar to our product candidates’ targets or indications;
our reliance on third parties to conduct our clinical trials and to manufacture drug substance and drug product for use in our clinical trials;
the size and growth potential of the markets for any of our current and future product candidates, and our ability to serve those markets;
our ability to identify and advance through clinical development any additional product candidates;
the commercialization of our current and future product candidates, if approved, including our ability to successfully build a specialty sales force and commercial infrastructure to market our current and future product candidates;
our ability to identify research priorities and apply a risk-mitigated strategy to efficiently discover and develop current and future product candidates;
our ability to retain and recruit key personnel;
our ability to obtain and maintain adequate intellectual property rights;
our expectations regarding government and third-party payor coverage, pricing, and reimbursement;
our estimates of our expenses, ongoing losses, capital requirements, the sufficiency of our current resources, and our needs for or ability to obtain additional financing;
the milestone payments that we may receive from Taiho Pharmaceutical Co., Ltd.;
potential investments in our pipeline and the potential for such product candidates;
the potential benefits of strategic collaboration agreements, our ability to enter into additional strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory, and commercialization expertise; and
developments and projections relating to our competitors or our industry.

ii


 

These factors are discussed more fully in our 2023 10-K and elsewhere in this Quarterly Report on Form 10-Q and other reports we file with the SEC. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and investors should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make or collaborations or strategic partnerships we may enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This Quarterly Report on Form 10-Q also contains estimates, projections, and other information concerning our industry, our business, and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research, as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” in our 2023 10-K and elsewhere in this Quarterly Report on Form 10-Q.
 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CULLINAN THERAPEUTICS, INC.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share amounts)

 

 

September 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,085

 

 

$

98,434

 

Short-term investments

 

 

475,993

 

 

 

368,633

 

Prepaid expenses and other current assets

 

 

13,961

 

 

 

13,124

 

Total current assets

 

 

592,039

 

 

 

480,191

 

Property and equipment, net

 

 

760

 

 

 

989

 

Operating lease right-of-use assets

 

 

2,019

 

 

 

2,543

 

Other assets

 

 

460

 

 

 

459

 

Long-term investments

 

 

57,976

 

 

 

 

Total assets

 

$

653,254

 

 

$

484,182

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,115

 

 

$

2,493

 

Accrued expenses and other current liabilities

 

 

20,831

 

 

 

24,204

 

Operating lease liabilities, current

 

 

1,258

 

 

 

1,440

 

Total current liabilities

 

 

24,204

 

 

 

28,137

 

Long-term liabilities:

 

 

 

 

 

 

Operating lease liabilities, net of current portion

 

 

1,188

 

 

 

2,150

 

Total liabilities

 

 

25,392

 

 

 

30,287

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 647,500 shares issued and outstanding as of September 30, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock, $0.0001 par value, 150,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 58,141,130 and 42,900,083 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

 

6

 

 

 

4

 

Additional paid-in capital

 

 

947,479

 

 

 

654,685

 

Accumulated other comprehensive income (loss)

 

 

970

 

 

 

(129

)

Accumulated deficit

 

 

(320,593

)

 

 

(200,857

)

Total Cullinan stockholders' equity

 

 

627,862

 

 

 

453,703

 

Noncontrolling interests

 

 

 

 

 

192

 

Total stockholders' equity

 

 

627,862

 

 

 

453,895

 

Total liabilities and stockholders' equity

 

$

653,254

 

 

$

484,182

 

See accompanying notes to the unaudited consolidated financial statements.

 

1


 

CULLINAN THERAPEUTICS, INC.

Consolidated Statements of Operations and Comprehensive INCOME (LOSS)

(unaudited)

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

35,506

 

 

$

33,821

 

 

$

102,411

 

 

$

113,308

 

General and administrative

 

 

13,349

 

 

 

10,982

 

 

 

39,460

 

 

 

31,856

 

Total operating expenses

 

 

48,855

 

 

 

44,803

 

 

 

141,871

 

 

 

145,164

 

Impairment of long-lived assets

 

 

 

 

 

(440

)

 

 

 

 

 

(440

)

Loss from operations

 

 

(48,855

)

 

 

(45,243

)

 

 

(141,871

)

 

 

(145,604

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

8,384

 

 

 

5,880

 

 

 

22,148

 

 

 

15,710

 

Other income (expense), net

 

 

(89

)

 

 

180

 

 

 

(205

)

 

 

356

 

Net loss

 

 

(40,560

)

 

 

(39,183

)

 

 

(119,928

)

 

 

(129,538

)

Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

(192

)

 

 

(179

)

Net loss attributable to common stockholders of Cullinan

 

$

(40,560

)

 

$

(39,183

)

 

$

(119,736

)

 

$

(129,359

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(40,560

)

 

$

(39,183

)

 

$

(119,928

)

 

$

(129,538

)

Unrealized gain on investments

 

 

1,446

 

 

 

574

 

 

 

1,099

 

 

 

1,550

 

Comprehensive loss

 

 

(39,114

)

 

 

(38,609

)

 

 

(118,829

)

 

 

(127,988

)

Comprehensive loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

(192

)

 

 

(179

)

Comprehensive loss attributable to Cullinan

 

$

(39,114

)

 

$

(38,609

)

 

$

(118,637

)

 

$

(127,809

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders of Cullinan:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.69

)

 

$

(0.91

)

 

$

(2.30

)

 

$

(3.15

)

Weighted-average shares used in computing net loss per share attributable to common stockholders of Cullinan:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

58,337

 

 

 

42,734

 

 

 

52,157

 

 

 

41,130

 

See accompanying notes to the unaudited consolidated financial statements.

 

2


CULLINAN THERAPEUTICS, INC.

Consolidated Statements of STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Noncontrolling

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interests

 

 

Equity

 

Balances at December 31, 2023

 

 

647,500

 

 

$

 

 

 

42,900,083

 

 

$

4

 

 

$

654,685

 

 

$

(129

)

 

$

(200,857

)

 

$

192

 

 

$

453,895

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

165,562

 

 

 

 

 

 

1,085

 

 

 

 

 

 

 

 

 

 

 

 

1,085

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,227

 

 

 

 

 

 

 

 

 

 

 

 

8,227

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(202

)

 

 

 

 

 

 

 

 

(202

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,148

)

 

 

(192

)

 

 

(37,340

)

Balances at March 31, 2024

 

 

647,500

 

 

 

 

 

 

43,065,645

 

 

 

4

 

 

 

663,997

 

 

 

(331

)

 

 

(238,005

)

 

 

 

 

 

425,665

 

Issuance of common stock and pre-funded warrants, net of issuance costs

 

 

 

 

 

 

 

 

14,421,070

 

 

 

1

 

 

 

262,651

 

 

 

 

 

 

 

 

 

 

 

 

262,652

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

384,923

 

 

 

1

 

 

 

3,335

 

 

 

 

 

 

 

 

 

 

 

 

3,336

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,533

 

 

 

 

 

 

 

 

 

 

 

 

10,533

 

Acquisition of noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,792

)

 

 

 

 

 

 

 

 

 

 

 

(3,792

)

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(145

)

 

 

 

 

 

 

 

 

(145

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42,028

)

 

 

 

 

 

(42,028

)

Balances at June 30, 2024

 

 

647,500

 

 

 

 

 

 

57,871,638

 

 

 

6

 

 

 

936,724

 

 

 

(476

)

 

 

(280,033

)

 

 

 

 

 

656,221

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

269,492

 

 

 

 

 

 

1,981

 

 

 

 

 

 

 

 

 

 

 

 

1,981

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,430

 

 

 

 

 

 

 

 

 

 

 

 

9,430

 

Acquisition of noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(656

)

 

 

 

 

 

 

 

 

 

 

 

(656

)

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,446

 

 

 

 

 

 

 

 

 

1,446

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40,560

)

 

 

 

 

 

(40,560

)

Balances at September 30, 2024

 

 

647,500

 

 

$

 

 

 

58,141,130

 

 

$

6

 

 

$

947,479

 

 

$

970

 

 

$

(320,593

)

 

$

 

 

$

627,862

 

See accompanying notes to the unaudited consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

3


CULLINAN THERAPEUTICS, INC.

Consolidated Statements of STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Noncontrolling

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interests

 

 

Equity

 

Balances at December 31, 2022

 

 

 

 

$

 

 

 

45,796,449

 

 

$

5

 

 

$

585,320

 

 

$

(2,601

)

 

$

(47,695

)

 

$

 

 

$

535,029

 

Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

179

 

 

 

179

 

Issuance of preferred stock in exchange for common stock

 

 

647,500

 

 

 

 

 

 

(6,475,000

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

22,152

 

 

 

 

 

 

(36

)

 

 

 

 

 

 

 

 

 

 

 

(36

)

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,259

 

 

 

 

 

 

 

 

 

 

 

 

7,259

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,359

 

 

 

 

 

 

 

 

 

1,359

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57,962

)

 

 

(179

)

 

 

(58,141

)

Balances at March 31, 2023

 

 

647,500

 

 

 

 

 

 

39,343,601

 

 

 

4

 

 

 

592,544

 

 

 

(1,242

)

 

 

(105,657

)

 

 

 

 

 

485,649

 

Issuance of common stock

 

 

 

 

 

 

 

 

3,310,000

 

 

 

 

 

 

38,388

 

 

 

 

 

 

 

 

 

 

 

 

38,388

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

81,703

 

 

 

 

 

 

214

 

 

 

 

 

 

 

 

 

 

 

 

214

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,920

 

 

 

 

 

 

 

 

 

 

 

 

7,920

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(383

)

 

 

 

 

 

 

 

 

(383

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,214

)

 

 

 

 

 

(32,214

)

Balances at June 30, 2023

 

 

647,500

 

 

 

 

 

 

42,735,304

 

 

 

4

 

 

 

639,066

 

 

 

(1,625

)

 

 

(137,871

)

 

 

 

 

 

499,574

 

Net issuance of common stock under equity-based compensation plans

 

 

 

 

 

 

 

 

25,340

 

 

 

 

 

 

112

 

 

 

 

 

 

 

 

 

 

 

 

112

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,740

 

 

 

 

 

 

 

 

 

 

 

 

7,740

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

574

 

 

 

 

 

 

 

 

 

574

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,183

)

 

 

 

 

 

(39,183

)

Balances at September 30, 2023

 

 

647,500

 

 

$

 

 

 

42,760,644

 

 

$

4

 

 

$

646,918

 

 

$

(1,051

)

 

$

(177,054

)

 

$

 

 

$

468,817

 

See accompanying notes to the unaudited consolidated financial statements.

4


CULLINAN THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(119,928

)

 

$

(129,538

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Equity-based compensation expense

 

 

28,190

 

 

 

22,919

 

Accretion on marketable securities

 

 

(11,958

)

 

 

(6,533

)

Depreciation and amortization

 

 

229

 

 

 

233

 

Impairment of long-lived assets

 

 

 

 

 

440

 

Realized gain on marketable securities

 

 

 

 

 

(20

)

Non-cash contributions from noncontrolling interests

 

 

 

 

 

4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(837

)

 

 

(2,650

)

Accounts payable

 

 

(378

)

 

 

(1,709

)

Accrued expenses and other current liabilities

 

 

(3,995

)

 

 

4,992

 

Income tax payable

 

 

 

 

 

(4,282

)

Net cash used in operating activities

 

 

(108,677

)

 

 

(116,144

)

Investing activities:

 

 

 

 

 

 

Purchase of marketable securities

 

 

(553,095

)

 

 

(307,371

)

Maturities of marketable securities

 

 

400,817

 

 

 

291,915

 

Purchase of property and equipment

 

 

 

 

 

(208

)

Net cash used in investing activities

 

 

(152,278

)

 

 

(15,664

)

Financing activities:

 

 

 

 

 

 

Issuance of common stock and pre-funded warrants, net of issuance costs

 

 

262,652

 

 

 

38,388

 

Net issuance of common stock under equity-based compensation plans

 

 

6,402

 

 

 

290

 

Acquisition of noncontrolling interests

 

 

(4,448

)

 

 

 

Issuance of convertible notes

 

 

 

 

 

1,825

 

Net cash provided by financing activities

 

 

264,606

 

 

 

40,503

 

Net increase (decrease) in cash and cash equivalents

 

 

3,651

 

 

 

(91,305

)

Cash and cash equivalents at beginning of period

 

 

98,434

 

 

 

156,152

 

Cash and cash equivalents at end of period

 

$

102,085

 

 

$

64,847

 

SUPPLEMENTAL NONCASH DISCLOSURE

 

 

 

 

 

 

Non-cash investing and financing activities and supplemental cash flow information

 

 

 

 

 

 

Cash paid (refunded) for income taxes

 

$

(2,274

)

 

$

4,708

 

Conversion of convertible note into noncontrolling interest

 

$

 

 

$

175

 

See accompanying notes to the unaudited consolidated financial statements.

5


CULLINAN THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1)
Nature of Business and Basis of Presentation

Organization

Cullinan Therapeutics, Inc., together with its consolidated subsidiaries ("Cullinan" or the "Company"), is a clinical-stage biopharmaceutical company dedicated to creating new standards of care for patients that was incorporated in September 2016 and has a principal place of business in Cambridge, Massachusetts. In April 2024, the Company changed its name from Cullinan Oncology, Inc. to Cullinan Therapeutics, Inc.

Liquidity

The Company has a history of significant operating losses and has had negative cash flows from operations since its inception and expects to continue to generate operating losses for the foreseeable future. Cullinan’s ultimate success depends on the outcome of its research and development activities as well as its ability to commercialize the Company’s product candidates. Cullinan is subject to a number of risks including, but not limited to, the need to obtain adequate additional funding for the ongoing and planned clinical development of its product candidates. Due to the numerous risks and uncertainties associated with pharmaceutical products and development, the Company is unable to accurately predict the timing or amount of funds required to complete development of its product candidates, and costs could exceed Cullinan’s expectations for a number of reasons, including reasons beyond the Company’s control.

Since inception, Cullinan has funded its operations primarily through the sale of equity securities and from licensing or selling the rights to its product candidates. The Company expects that its cash, cash equivalents, and short-term investments of $578.1 million, and long-term investments and interest receivable of $60.9 million as of September 30, 2024, will be sufficient to fund its operating expenses and capital expenditure requirements through the next twelve months from the date of issuance of these consolidated financial statements. In April 2024, Cullinan sold shares of its common stock and pre-funded warrants for shares of its common stock in a private placement (the “2024 Private Placement”) for net proceeds of $262.7 million, after deducting offering costs of $17.3 million. Refer to Note 6 for additional detail regarding the 2024 Private Placement.

(2)
Summary of Significant Accounting Policies

Cullinan’s significant accounting policies have not changed materially from those disclosed in its annual audited consolidated financial statements and accompanying notes in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 10-K”).

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and in accordance with applicable rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting and include the accounts of the Company and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The Company operates as one segment, which is developing early-stage therapeutics.

In the opinion of Cullinan’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, and necessary for fair financial statement presentation. The preparation of these unaudited consolidated financial statements and accompanying notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual audited consolidated financial statements and accompanying notes included in the 2023 10-K.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued an accounting standards update to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The main provisions of this update require companies to disclose, on an annual and interim basis, significant segment expenses, segment profit and loss, and other segments items that are regularly provided to the Company's Chief Operating Decision Maker (the "CODM"). This update also requires companies to disclose the title and position of the CODM and to explain how the CODM uses the reported segment measures in assessing segment performance and deciding how to allocate resources. The update also requires companies with a single reportable segment to provide all required segment reporting disclosures. This new standard will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Cullinan adopted this standard on January 1, 2024 for 2024 annual reporting and interim periods beginning in 2025.

6


Recently Issued Accounting Pronouncements

Cullinan currently qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act, which allows the Company to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to use the extended transition period for new or revised accounting standards during the period in which it remains an EGC; however, Cullinan may adopt certain new or revised accounting standards early. Based on the market value of the Company's common stock held by non-affiliates as of June 30, 2024, the Company will cease to be an EGC as of December 31, 2024. As a result, beginning with the Company’s Annual Report on Form 10-K for the year ending December 31, 2024, the Company will not be able to rely on the extended transition period noted above and will be required to adopt all new accounting pronouncements within the same time periods as other public companies that are not EGCs.

In December 2023, the FASB issued an accounting standards update to enhance transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The main provisions in this update will require companies to disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This update will also require companies to disclose, on an annual basis, the amount of income taxes paid, income (or loss) from continuing operations before income tax expense (or benefit), and income tax expense (or benefit) from continuing operations, disaggregated by federal, state, and foreign jurisdictions. This new standard will be effective for fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company expects that it will adopt this new standard on January 1, 2025. The Company is evaluating the impact this new standard will have on its consolidated financial statements and associated disclosures.

(3)
Financial Instruments

Investments

Cullinan recognized its investments by security type at September 30, 2024 as follows (in thousands):

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair Value

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government notes

 

$

227,900

 

 

$

244

 

 

$

(1

)

 

$

228,143

 

Corporate notes

 

 

222,233

 

 

 

640

 

 

 

(10

)

 

 

222,863

 

Asset-backed securities

 

 

24,932

 

 

 

55

 

 

 

 

 

 

24,987

 

Total short-term investments

 

 

475,065

 

 

 

939

 

 

 

(11

)

 

 

475,993

 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Corporate notes

 

 

57,934

 

 

 

98

 

 

 

(56

)

 

 

57,976

 

Total long-term investments

 

 

57,934

 

 

 

98

 

 

 

(56

)

 

 

57,976

 

Total investments

 

$

532,999

 

 

$

1,037

 

 

$

(67

)

 

$

533,969

 

Cullinan recognized its investments by security type at December 31, 2023 as follows (in thousands):

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair Value

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government notes

 

$

208,289

 

 

$

221

 

 

$

(16

)

 

$

208,494

 

Corporate notes

 

 

99,359

 

 

 

27

 

 

 

(275

)

 

 

99,111

 

Asset-backed securities

 

 

61,114

 

 

 

3

 

 

 

(89

)

 

 

61,028

 

Total short-term investments

 

 

368,762

 

 

 

251

 

 

 

(380

)

 

 

368,633

 

Total investments

 

$

368,762

 

 

$

251

 

 

$

(380

)

 

$

368,633

 

 

7


Fair Value of Financial Instruments

The following table sets forth the fair value of Cullinan’s financial assets that were measured at fair value on a recurring basis as of September 30, 2024 (in thousands):

 

 

Level 1