Cullinan Therapeutics, Inc. [CGEM] Filings

10-Q 1 cgem-20240630.htm 10-Q 10-Q

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 June 30, 2024


☐	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 July 31, 2024 was 57,976,641.

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	20
Item 4.	Controls and Procedures	20

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
	Signatures	24

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 submissions, 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.

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)


	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	115,021		$	98,434
Short-term investments		547,474			368,633
Prepaid expenses and other current assets		15,304			13,124
Total current assets		677,799			480,191
Property and equipment, net		836			989
Operating lease right-of-use assets		2,121			2,543
Other assets		460			459
Total assets	$	681,216		$	484,182
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,555		$	2,493
Accrued expenses and other current liabilities		20,706			24,204
Operating lease liabilities, current		1,215			1,440
Total current liabilities		23,476			28,137
Long-term liabilities:
Operating lease liabilities, net of current portion		1,519			2,150
Total liabilities		24,995			30,287
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 647,500 shares issued and outstanding as of June 30, 2024 and December 31, 2023.		—			—
Common stock, $0.0001 par value, 150,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 57,871,638 and 42,900,083 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		6			4
Additional paid-in capital		936,724			654,685
Accumulated other comprehensive loss		(476	)		(129	)
Accumulated deficit		(280,033	)		(200,857	)
Total Cullinan stockholders' equity		656,221			453,703
Noncontrolling interests		—			192
Total stockholders' equity		656,221			453,895
Total liabilities and stockholders' equity	$	681,216		$	484,182

See accompanying notes to the unaudited consolidated financial statements.

CULLINAN THERAPEUTICS, INC.

Consolidated Statements of Operations and Comprehensive INCOME (LOSS)

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	36,259		$	27,391		$	66,905		$	79,487
General and administrative		13,768			10,214			26,111			20,874
Total operating expenses		50,027			37,605			93,016			100,361
Loss from operations		(50,027	)		(37,605	)		(93,016	)		(100,361	)
Other income (expense):
Interest income		8,071			5,322			13,764			9,830
Other income (expense), net		(72	)		69			(116	)		176
Net loss		(42,028	)		(32,214	)		(79,368	)		(90,355	)
Net loss attributable to noncontrolling interests		—			—			(192	)		(179	)
Net loss attributable to common stockholders of Cullinan	$	(42,028	)	$	(32,214	)	$	(79,176	)	$	(90,176	)

Comprehensive income (loss):
Net loss	$	(42,028	)	$	(32,214	)	$	(79,368	)	$	(90,355	)
Unrealized gain (loss) on investments		(145	)		(383	)		(347	)		976
Comprehensive loss		(42,173	)		(32,597	)		(79,715	)		(89,379	)
Comprehensive loss attributable to noncontrolling interests		—			—			(192	)		(179	)
Comprehensive loss attributable to Cullinan	$	(42,173	)	$	(32,597	)	$	(79,523	)	$	(89,200	)

Net loss per share attributable to common stockholders of Cullinan:
Basic and diluted	$	(0.75	)	$	(0.82	)	$	(1.61	)	$	(2.24	)
Weighted-average shares used in computing net loss per share attributable to common stockholders of Cullinan:
Basic and diluted		55,052			39,952			49,031			40,315

See accompanying notes to the unaudited consolidated financial statements.

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			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

See accompanying notes to the unaudited consolidated financial statements.

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			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

See accompanying notes to the unaudited consolidated financial statements.

CULLINAN THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Six Months Ended June 30,
	2024			2023
Operating activities:
Net loss	$	(79,368	)	$	(90,355	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity-based compensation expense		18,760			15,179
Accretion on marketable securities		(7,031	)		(3,516	)
Depreciation and amortization		153			153
Non-cash contributions from noncontrolling interests		—			4
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(2,181	)		1,161
Accounts payable		(938	)		(169	)
Accrued expenses and other current liabilities		(3,933	)		(178	)
Income tax payable		—			(4,282	)
Net cash used in operating activities		(74,538	)		(82,003	)
Investing activities:
Purchase of marketable securities		(456,298	)		(170,592	)
Maturities of marketable securities		284,142			198,094
Purchase of property and equipment		—			(208	)
Net cash provided by (used in) investing activities		(172,156	)		27,294
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		4,421			178
Acquisition of noncontrolling interests		(3,792	)		—
Issuance of convertible notes		—			1,825
Net cash provided by financing activities		263,281			40,391
Net increase (decrease) in cash and cash equivalents		16,587			(14,318	)
Cash and cash equivalents at beginning of period		98,434			156,152
Cash and cash equivalents at end of period	$	115,021		$	141,834
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.

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, short-term investments, and interest receivable of $664.9 million as of June 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.

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 June 30, 2024 as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government notes	$	288,215	$	4	$	(140	)	$	288,079
Corporate notes		234,954		9		(351	)		234,612
Asset-backed securities		24,781		2		—			24,783
Total short-term investments		547,950		15		(491	)		547,474
Total investments	$	547,950	$	15	$	(491	)	$	547,474

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

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 June 30, 2024 (in thousands):


	Level 1		Level 2		Level 3		Total
Short-term investments
U.S. government notes	$	—	$	288,079	$	—	$	288,079
Corporate notes		—		234,612		—		234,612
Asset-backed securities		—		24,783		—		24,783
Total short-term investments		—		547,474		—		547,474
Total investments	$	—	$	547,474	$	—	$	547,474

The following table sets forth the fair value of the Company’s financial assets that were measured at fair value on a recurring basis as of December 31, 2023 (in thousands):


	Level 1		Level 2		Level 3		Total
Short-term investments
U.S. government notes	$	—	$	208,494	$	—	$	208,494
Corporate notes		—		99,111		—		99,111
Asset-backed securities		—		61,028		—		61,028
Total short-term investments		—		368,633		—		368,633
Total investments	$	—	$	368,633	$	—	$	368,633

As of June 30, 2024 and December 31, 2023, the fair values of Cullinan's cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximated their carrying values due to the short-term nature of these instruments.

(4)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Contracted research and development expenses	$	12,021	$	8,434
Due to Taiho under collaboration agreement, net		2,359		7,869
Employee compensation		4,106		6,987
Other current liabilities		2,220		914
Total accrued expenses and other current liabilities	$	20,706	$	24,204

(5)

License and Collaboration Agreements

Harbour License Agreement

In February 2023, the Company and Harbour BioMed US Inc. (“Harbour”) entered into a license and collaboration agreement (the “Harbour License Agreement”), pursuant to which Harbour granted to Cullinan an exclusive license for the development, manufacturing and commercialization of HBM7008 (CLN-418) in the U.S.

Under the terms of the Harbour License Agreement, Cullinan paid Harbour an upfront license fee of $25.0 million at signing. Harbour is eligible to receive up to $148.0 million in milestone payments based on the achievement of pre-specified development and regulatory milestones. Harbour is also eligible to receive up to an additional $415.0 million in sales-based milestones as well as tiered royalties up to the high teens on a licensed product-by-licensed product basis, as a percentage of U.S. commercial sales. In addition, under the Harbour License Agreement, Harbour granted Cullinan certain intellectual property rights to enable the Company to perform its obligations and exercise its rights under the Harbour License Agreement. Cullinan evaluated the Harbour License Agreement and determined that the exclusive license for the development, manufacturing and commercialization of HBM7008 (CLN-418) in the U.S. represented an asset acquisition of in-process research and development. The Company also determined that the asset had no alternative future use at the time of acquisition, and therefore, the upfront license fee of $25.0 million was recorded within research and development expenses for the six months ended June 30, 2023. As of June 30, 2024, no milestones have been achieved under the Harbour License Agreement.

Unless earlier terminated, the Harbour License Agreement will continue in effect until the expiration of Cullinan’s royalty obligations. The Harbour License Agreement may be terminated by either party for a material breach by the other party, subject to notice and cure provisions, or in the event of the other party’s insolvency.

Cullinan may terminate the Harbour License Agreement for convenience by providing 90 days written notice to Harbour. In the Harbour License Agreement, each party made customary representations and warranties and agreed to customary covenants, including, without limitation, with respect to indemnification, for transactions of this type. Refer to Note 12 for additional details regarding the Harbour License Agreement.

Co-Development Agreement with Taiho

Cullinan has a co-development agreement with an affiliate of Taiho, pursuant to which the Company is collaborating to develop zipalertinib and has the option to co-commercialize zipalertinib in the U.S. Development costs for zipalertinib are shared equally between Taiho and the Company with each party receiving 50% of any future pre-tax profits from potential U.S. sales of zipalertinib.

The Company concluded that the co-development agreement with Taiho is a collaborative arrangement because Cullinan is an active participant in the development of zipalertinib. Payments made to or received from Taiho for zipalertinib development activities after the execution of the co-development agreement are recorded within research and development expenses. For the three and six months ended June 30, 2024, the Company recorded research and development expense of $5.2 million and $11.2 million, respectively, related to its share of costs incurred by Taiho. Cullinan incurred $2.8 million and $4.7 million of costs that were reimbursable by Taiho during the three and six months ended June 30, 2024, respectively, which were recorded as a reduction to research and development expenses. For the three and six months ended June 30, 2023, the Company recorded research and development expense of $5.5 million and $10.2 million, respectively, related to its share of costs incurred by Taiho. Cullinan incurred $2.1 million and $3.1 million of costs that were reimbursable by Taiho during the three and six months ended June 30, 2023, respectively, which were recorded as a reduction to research and development expenses. The net amounts of $2.4 million and $7.9 million due to Taiho were recorded within accrued expenses and other current liabilities as of June 30, 2024 and December 31, 2023, respectively.

Other License and Collaboration Agreements

During the three and six months ended June 30, 2024, no milestones were achieved under the Company’s other license and collaboration agreements.

During the three months ended June 30, 2023, no milestones were achieved under the Company’s other license and collaboration agreements. During the six months ended June 30, 2023, Cullinan recorded $0.2 million in research and development expenses for milestones achieved under its other license and collaboration agreements.

(6)

Stockholders' Equity

Common Stock

Each share of common stock entitles the holder to one vote and to receive dividends when and if declared by the board of directors of the Company. No dividends have been declared through June 30, 2024.

2024 Private Placement

In April 2024, Cullinan completed the 2024 Private Placement in which Cullinan issued approximately 14.4 million shares of its common stock and pre-funded warrants to purchase approximately 0.3 million additional shares of its common stock. Cullinan received net proceeds of $262.7 million from the 2024 Private Placement, after deducting offering costs of $17.3 million. Refer to the discussion under the heading “Warrants” below for further detail regarding the pre-funded warrants.

At-the-Market Equity Offering Program

In May 2023, Cullinan entered into an agreement with Cowen and Company, LLC (“Cowen”) to establish an at-the-market equity offering program (the “ATM") pursuant to which the Company may offer and sell up to $125.0 million of its common stock from time to time through Cowen, acting as its sales agent. The Company made no sales under the ATM in the six months ended June 30, 2024. Through June 30, 2024, the Company has sold approximately 3.3 million shares under the ATM and received net proceeds of $38.4 million after deducting commissions. As of June 30, 2024, Cullinan had $85.6 million in shares of its common stock remaining under the ATM.

Preferred Stock

In January 2023, the Company entered into an exchange agreement with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP, and MSI BVF SPV, LLC (the “Stockholders”), pursuant to which the Stockholders exchanged 6.5 million shares of Cullinan’s common stock for 0.6 million shares of newly designated Series A convertible preferred stock, a “toothless” preferred stock, par value $0.0001 per share.

Each share of the preferred stock will be convertible into ten shares of common stock at the option of the holder at any time, subject to certain limitations, including that the holder will be prohibited from converting preferred stock into common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of common stock more than 9.99% of the total common stock then issued and outstanding immediately following the conversion of such shares of preferred stock. Holders of the preferred stock are permitted to increase this percentage to an amount not to exceed 19.99% upon 60 days notice.

Shares of preferred stock will generally have no voting rights, except as required by law and except that the consent of a majority of the holders of the outstanding preferred stock will be required to amend the terms of the preferred stock. In the event of the Company’s liquidation, dissolution or winding up, holders of preferred stock will participate pari passu with any distribution of proceeds to holders of common stock. Holders of preferred stock are entitled to receive when, as, and if dividends are declared and paid on the common stock, an equivalent dividend, calculated on an as-converted basis. Shares of preferred stock are otherwise not entitled to dividends.

The preferred stock ranks (i) senior to any class or series of capital stock of Cullinan hereafter created specifically ranking by its terms junior to the preferred stock; (ii) on parity with the common stock and any class or series of capital stock of the Company created specifically ranking by its terms on parity with the preferred stock; and (iii) junior to any class or series of capital stock of Cullinan created specifically ranking by its terms senior to any preferred stock, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

The Company determined that the preferred stock should be classified as permanent equity.

Noncontrolling Interests

Certain of the Company's clinical-stage product candidates are held through development subsidiaries in which the Company has controlling interests. These development subsidiaries have issued common stock and preferred stock to the Company and to third parties. The holders of subsidiary common stock and preferred stock are generally entitled to one vote per share. The holders of subsidiary common stock are entitled to receive dividends when and if declared by the subsidiaries’ board of directors and distributions in either case only after the payment of all preferential amounts required to be paid to the holders of shares of preferred stock of the respective subsidiary. The following table shows the Company’s ownership interest as of June 30, 2024 and December 31, 2023, respectively, in product candidates in which the Company has a controlling interest:


	Ownership Interest as of
Product Candidate	June 30, 2024	December 31, 2023
CLN-619	99%	95%
CLN-049	97%	96%
CLN-617	94%	94%

In April 2024, Cullinan paid $3.8 million to acquire shares of its CLN-619 development subsidiary that were held by noncontrolling interests.

Warrants

As of June 30, 2024, the Company had potentially issuable shares of common stock related to unexercised pre-funded warrants to purchase 0.3 million shares of the Company’s common stock at an exercise price of $0.001 per share. The pre-funded warrants may be exercised at the option of the holder at any time, subject to certain limitations. The exercise price and the number of shares are subject to adjustment for certain dividend payments and upon reclassification, exchange, combination or substitution of the shares of common stock. The pre-funded warrants expire in April 2054 if they have not been exercised by that time.

Cullinan determined that the pre-funded warrants should be equity-classified. The Company also determined that the pre-funded warrants should be included in the weighted-average shares used in computing basic net loss per share attributable to common stockholders of Cullinan.

(7)

Equity-Based Compensation

Cullinan recorded equity-based compensation in the following expense categories in the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
General and administrative	$	6,679	$	4,671	$	11,771	$	8,876
Research and development		3,854		3,249

Cullinan Therapeutics, Inc. [CGEM] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-15]
10-K	[2024-03-14]
10-Q	[2023-11-08]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-09]
10-Q	[2022-11-14]
10-Q	[2022-08-10]
10-Q	[2022-05-16]
10-K	[2022-03-17]
10-Q	[2021-11-09]
10-Q	[2021-08-10]
10-Q	[2021-05-14]
10-K	[2021-03-30]
S-1	[2020-12-18]