Common Stock and Noncontrolling Interest in Subsidiaries

3 Months Ended

Mar. 31, 2021

Common Stock And Noncontrolling Interest In Subsidiaries [Abstract]

Common Stock and Noncontrolling Interest in Subsidiaries

(7) Common Stock and Noncontrolling Interest in Subsidiaries

Common Stock

As of December 31, 2020 and March 31, 2021, 34,900,878 and 150,000,000 shares of common stock were authorized, respectively. 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 March 31, 2021.

The LLC’s outstanding Non-Voting Incentive Units have been retroactively adjusted to reflect the effect of the Reorganization and Reverse Stock Split. Refer to Note 3 for additional details relating to the Reorganization and Reverse Stock Split.

Noncontrolling Interest in Subsidiaries

Certain Subsidiaries issue common stock in connection with licensing agreements and to employees, directors and consultants pursuant to subsidiary equity incentive plans. The holders of Subsidiary common stock are 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 Series A Preferred Stock.

In November 2020, the LLC entered into a Restricted Stock Contribution Agreement (Contribution Agreement) with Amber, Pearl and Florentine where the LLC exchanged common units of the LLC for restricted common stock held by LLC employees at each of the Subsidiaries. The LLC’s outstanding restricted common units have been retroactively adjusted to reflect the effect of the Reorganization and Reverse Stock Split. Refer to Note 3 for additional details relating to the Reorganization and the Reverse Stock Split.

Cullinan Apollo Corp.

In December 2018, Apollo entered into a Series A Preferred Stock purchase agreement with the Company. The initial closing took place in December and Apollo sold 7,000,000 subsidiary shares of Series A Preferred Stock for gross proceeds of $7.0 million. At any time following the initial closing, upon the election of Apollo’s board of directors, Apollo may sell up to an aggregate of 11,000,000 Series A Preferred Stock shares at one or more subsequent closings at $1.00 per share.

The Company did not allocate any losses to the noncontrolling interests for the three months ended March 31, 2020 and 2021.

Cullinan Pearl Corp.

In February 2019, Pearl entered into a Series A Preferred Stock Purchase Agreement with the Company and Taiho Ventures, LLC (Taiho Ventures) to sell up to 23,000,000 shares of Pearl’s Series A Preferred Stock for $1.00 per share. Pearl completed the initial closing of its Series A Preferred Stock where Pearl issued 14,000,000 shares of Series A Preferred Stock for $14.0 million to the Company and Taiho Ventures. In connection with the license agreement with Taiho Pharma, Pearl issued 1,860,000 shares of common stock as anti-dilution shares, in exchange for no cash consideration.

In August 2020, Pearl issued 9,000,000 additional subsidiary shares of Series A Preferred Stock for $9.0 million to the Company and Taiho Ventures. In connection with the license agreement, Pearl then issued 1,206,000 additional shares of its common stock as anti-dilution shares, in exchange for no additional consideration.

In November 2020, pursuant a Subscription Agreement between the Company and Pearl, the Company purchased 2,730,227 shares of Pearl’s common stock at $0.44 per share, for an aggregate purchase price of $1.2 million.

Under the HLBV method, $0.2 million of losses and $1.7 million of income were attributed to noncontrolling interests for the three months ended March 31, 2020 and 2021, respectively, due to Taiho Ventures’ preferred stock ownership in Pearl.

Cullinan Amber Corp.

In April 2020, in connection with its Series A Preferred Stock financing, Amber issued 3,000,000 shares of its Series A Preferred Stock to the Company for gross proceeds of $3.0 million. At any time following the initial closing, upon election of Amber’s board of directors, Amber may sell up to an aggregate of 9,000,000 shares of Amber’s Series A Preferred Stock at one or more subsequent closings at $1.00 per share.

In April 2020, pursuant to the license agreement between Amber and the Massachusetts Institute of Technology, Amber issued 400,132 shares of its common stock, in exchange for no additional consideration as set forth in the license agreement.

The Company did not allocate any losses to the noncontrolling interests for the three months ended March 31, 2020 and 2021.

Cullinan Florentine Corp.

In August 2020, Florentine entered into a Series A Preferred Stock purchase agreement with the Company. The initial closing took place in August 2020 and Florentine sold 6,000,000 subsidiary shares of Series A Preferred Stock for gross proceeds of $6.0 million. At any time following the initial closing, upon the election of the Florentine’s board of directors, Florentine may sell up to an additional 6,000,000 shares of Series A Preferred Stock at one or more subsequent closings at $1.00 per share. Pursuant to the Tübingen License Agreement, Florentine issued 725,118 shares of its common stock, in exchange for no additional consideration as set forth in the license agreement.

In December 2020, Florentine issued 6,000,000 additional shares of its Series A Preferred Stock for proceeds of $6,000,000 under the Florentine Series A Preferred Stock purchase agreement. Florentine issued additional 381,810 shares of its common stock to DFKZ and UFE as anti-dilution shares, in exchange for no additional consideration as set forth in the license agreement.

The Company did not allocate any losses to the noncontrolling interests for the three months ended March 31, 2020 and 2021.

Cullinan MICA Corp.

In May 2020, MICA issued 6,088,282 million shares of Series A Senior Preferred Stock, including 5,385,787 to the Company, at $1.31 per share. See Note 6 for further details.

Using a market-based approach and an option-pricing allocation method, MICA determined the fair market value of MICA’s equity at acquisition was $12.8 million, of which $7.1 million was allocated to the Company’s Series A Senior Preferred Stock position, and $5.7 million was initially allocated to noncontrolling interests, including the Junior Preferred and Common Stockholders.

In December 2020, the MICA board authorized the issuance of 3,367,804 shares of MICA common stock to the Company, at a purchase price of $0.23 per share for aggregate proceeds to MICA of $0.8 million. As a result of these transactions, the Company’s ownership interests in MICA increased to 35% as of December 31, 2020.

Under the HLBV method, $0.2 million of losses were attributed to noncontrolling interests for the three months ended March 31, 2021.