SEC Filing | Cullinan Oncology, Inc.

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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 September 30, 2022


☐	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 ONCOLOGY, 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)

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 November 4, 2022 was 45,772,452.

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	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	33

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 (the “Exchange Act”) 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, 2021 (the "2021 10-K") and other filings with the Securities Exchange Commission (the “SEC”), including the following:

•

the success, cost and timing of our clinical development of our product candidates, including zipalertinib (CLN-081/TAS6417), CLN-049 and CLN-619;

•

the initiation, timing, progress, results and cost of our research and development programs and our current and future preclinical and clinical studies, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•

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 or engaged in the development of treatments that our product candidates are designed to target;

•

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 oncology diseases and any of our current product candidates or other product candidates we may identify and pursue, 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 product candidates and any other product candidates we may identify and pursue, if approved, including our ability to successfully build a specialty sales force and commercial infrastructure to market our current product candidates and any other product candidates we may identify and pursue;

•

the expected benefits of our hub-and-spoke business model, including our ability to identify research priorities and apply a risk-mitigated strategy to efficiently discover and develop 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 and reimbursement;

•

our estimates of our expenses, ongoing losses, capital requirements and our needs for or ability to obtain additional financing;

•

the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;

•

our financial performance;

•

developments and projections relating to our competitors or our industry; and

•

the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and future clinical trials.

These factors are discussed more fully in our 2021 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 2021 10-K and elsewhere in this Quarterly Report on Form 10-Q.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CULLINAN ONCOLOGY, INC.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share amounts)


	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	242,657		$	59,774
Short-term investments		333,294			230,692
Prepaid expenses and other current assets		6,124			6,098
Total current assets		582,075			296,564
Property and equipment, net		792			77
Operating lease right-of-use assets		4,496			—
Other assets		460			147
Long-term investments		29,414			140,397
Total assets	$	617,237		$	437,185
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,516		$	3,169
Accrued expenses and other current liabilities		13,507			8,577
Income tax payable		11,398			—
Operating lease liabilities, current		696			—
Total current liabilities		27,117			11,746
Long-term liabilities:
Operating lease liabilities, net of current portion		3,992			—
Deferred rent		—			65
Total liabilities		31,109			11,811
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 45,743,027 and 44,292,102 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		5			4
Additional paid-in capital		610,965			584,714
Accumulated other comprehensive loss		(3,929	)		(838	)
Accumulated deficit		(20,913	)		(158,909	)
Total Cullinan stockholders' equity		586,128			424,971
Noncontrolling interests		—			403
Total stockholders' equity		586,128			425,374
Total liabilities and stockholders' equity	$	617,237		$	437,185

See accompanying notes to the unaudited consolidated financial statements.

CULLINAN ONCOLOGY, 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,
	2022			2021			2022			2021
License revenue	$	—		$	—		$	—		$	18,943
Operating expenses:
Research and development		19,680			12,680			70,627			36,873
General and administrative		10,086			5,695			28,902			15,677
Total operating expenses		29,766			18,375			99,529			52,550
Gain on sale of Cullinan Pearl		—			—			276,785			—
Income (loss) from operations		(29,766	)		(18,375	)		177,256			(33,607	)
Other income (expense):
Interest income		2,353		118				3,247		340
Other income (expense), net		—			(2	)		(241	)		(12	)
Net income (loss) before income taxes		(27,413	)		(18,259	)		180,262			(33,279	)
Income tax expense (benefit)		(2,523	)		—			43,979			—
Net income (loss)		(24,890	)		(18,259	)		136,283			(33,279	)
Net income (loss) attributable to noncontrolling interests		(86	)		(909	)		(1,713	)		(223	)
Net income (loss) attributable to common stockholders of Cullinan	$	(24,804	)	$	(17,350	)	$	137,996		$	(33,056	)

Comprehensive income (loss):
Net income (loss)	$	(24,890	)	$	(18,259	)	$	136,283		$	(33,279	)
Unrealized gain (loss) on investments		(296	)		57			(3,091	)		(56	)
Comprehensive income (loss)		(25,186	)		(18,202	)		133,192			(33,335	)
Comprehensive income (loss) attributable to noncontrolling interests		(86	)		(909	)		(1,713	)		(223	)
Comprehensive income (loss) attributable to Cullinan	$	(25,100	)	$	(17,293	)	$	134,905		$	(33,112	)

Earnings (net loss) per share:
Basic	$	(0.54	)	$	(0.40	)	$	3.07		$	(0.76	)
Diluted	$	(0.54	)	$	(0.40	)	$	2.96		$	(0.76	)

Weighted-average shares used in computing earnings (net loss) per share:
Basic		45,611			43,439			44,966			43,254
Diluted		45,611			43,439			46,580			43,254

See accompanying notes to the unaudited consolidated financial statements.

CULLINAN ONCOLOGY, INC.

Consolidated Statements of STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Retained Earnings (Accumulated			Noncontrolling Interest in			Total Stockholders'
	Shares		Amount		Capital		(Loss)			Deficit)			Subsidiaries			Equity
Balances at December 31, 2021		44,292,102	$	4	$	584,714	$	(838	)	$	(158,909	)	$	403		$	425,374
Issuance of subsidiary preferred stock		—		—		—		—			—			1,153			1,153
Net issuance of common stock under equity-based compensation plans		367,924		—		1,566		—			—			—			1,566
Equity-based compensation		—		—		6,559		—			—			6			6,565
Unrealized loss on investments		—		—		—		(2,296	)		—			—			(2,296	)
Net loss		—		—		—		—			(12,098	)		(794	)		(12,892	)
Balances at March 31, 2022		44,660,026		4		592,839		(3,134	)		(171,007	)		768			419,470
Issuance of subsidiary common stock		—		—		—		—			—			139			139
Net issuance of common stock under equity-based compensation plans		736,372		1		2,834		—			—			—			2,835
Equity-based compensation		—		—		8,602		—			—			6			8,608
Unrealized loss on investments		—		—		—		(499	)		—			—			(499	)
Net income (loss)		—		—		—		—			174,898			(833	)		174,065
Balances at June 30, 2022		45,396,398		5		604,275		(3,633	)		3,891			80			604,618
Net issuance of common stock under equity-based compensation plans		346,629		—		1,425		—			—			—			1,425
Equity-based compensation		—		—		5,265		—			—			6			5,271
Unrealized loss on investments		—		—		—		(296	)		—			—			(296	)
Net loss		—		—		—		—			(24,804	)		(86	)		(24,890	)
Balances at September 30, 2022		45,743,027	$	5	$	610,965	$	(3,929	)	$	(20,913	)	$	—		$	586,128

See accompanying notes to the unaudited consolidated financial statements.

CULLINAN ONCOLOGY, INC.

Consolidated Statements of STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Noncontrolling Interest in		Total Stockholders'
	Shares		Amount		Capital		(Loss)			Deficit			Subsidiaries		Equity
Balances at December 31, 2020		29,831,125	$	3	$	292,348	$	(2	)	$	(93,339	)	$	1,304	$	200,314
Initial public offering, net of issuance costs of $22,870		13,685,000		1		264,515		—			—			—		264,516
Equity-based compensation		—		—		3,503		—			—			5		3,508
Unrealized loss on investments		—		—		—