UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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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
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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The |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐ |
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Accelerated filer ☐ |
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Smaller reporting company |
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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
As of July 24, 2023, the registrant had
CYCLERION PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2023
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. All statements in this report, other than statements of historical facts, including statements about future events, financing plans, financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations, are forward-looking statements that involve certain risks and uncertainties. Use of the words “may,” “might,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal” or the negative of those words or other similar expressions may identify forward-looking statements that represent our current judgment about possible future events, but the absence of these words does not necessarily mean that a statement is not forward-looking.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market and regulatory conditions and the following:
3
See the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and elsewhere in this Quarterly Report on Form 10-Q for a further description of these and other factors. We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
4
Cyclerion Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(In thousands except share data)
(Unaudited)
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June 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Operating lease right-of-use asset |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued research and development costs |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Commitments and contingencies (Note 6) |
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Stockholders' equity |
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Preferred shares, |
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Common stock, |
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Paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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*Adjusted retroactively for reverse stock split - see Note 1
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Cyclerion Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands except per share data)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues: |
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Revenue from development agreement |
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Revenue from grants |
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Total revenues |
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Cost and expenses: |
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Research and development |
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General and administrative |
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Total cost and expenses |
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Loss from operations |
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Interest and other income, net |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share: |
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Basic and diluted net loss per share (*) |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares used in calculating: |
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Basic and diluted net loss per share |
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Other comprehensive loss: |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive loss: |
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Foreign currency translation adjustment loss |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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*Adjusted retroactively for reverse stock split - see Note 1
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Cyclerion Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands except share data)
(Unaudited)
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Common Stock |
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Paid-in |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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capital |
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deficit |
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loss |
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equity |
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Balance at December 31, 2021 |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan |
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— |
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— |
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— |
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— |
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Share‑based compensation expense related to issuance of stock options to non-employees |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at March 31, 2022 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan |
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— |
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— |
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— |
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Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan |
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— |
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— |
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— |
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— |
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Share‑based compensation expense related to issuance of stock options to non-employees |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2022 |
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— |
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( |
) |
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( |
) |
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7
Cyclerion Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands except share data)
(Unaudited)
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Common Stock (*) |
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Preferred Stock |
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Paid-in |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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deficit |
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loss |
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equity |
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Balance at December 31, 2022 |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan |
|
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— |
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— |
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— |
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— |
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— |
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— |
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Share‑based compensation expense related to issuance of stock options to non-employees |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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Issuance of preferred shares |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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— |
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Share‑based compensation expense related to issuance of stock options to non-employees |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Fractional shares issuance |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at June 30, 2023 |
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— |
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— |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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*Adjusted retroactively for reverse stock split - see Note 1
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Cyclerion Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Six Months Ended |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash (used in) operating activities: |
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Depreciation and amortization |
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Share-based compensation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Related party accounts receivable |
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Prepaid expenses |
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( |
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Other current assets |
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( |
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Operating lease assets |
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Other assets |
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Accounts payable |
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( |
) |
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Accrued research and development costs |
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( |
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( |
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Accrued expenses and other current liabilities |
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( |
) |
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Net cash (used in) operating activities |
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( |
) |
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( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from stock purchase agreement |
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Proceeds from exercises of stock options and ESPP |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
) |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
) |
Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
9
Cyclerion Therapeutics, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of Business
Nature of Operations
Cyclerion Therapeutics, Inc. (“Cyclerion”, the “Company” or “we”) is a biopharmaceutical company on a mission to develop treatments for serious diseases. Our portfolio includes novel soluble guanylate cyclase ("sGC") stimulators that modulate a key node in a fundamental signaling network in both the central nervous system ("CNS") and the periphery. The nitric oxide ("NO") soluble guanylate cyclase ("sGC") cyclic guanosine monophosphate ("cGMP") signaling pathway is a fundamental mechanism that precisely controls key aspects of physiology throughout the body. The NO-sGC-cGMP pathway, regulates diverse and critical biological functions and has been successfully targeted with several drugs.
Praliciguat is a systemic sGC stimulator that is licensed to Akebia Therapeutics Inc. ("Akebia") and being advanced in rare kidney disease. Olinciguat is a clinical-stage vascular sGC stimulator that the Company intends to out-license for cardiovascular diseases. Zagociguat is a clinical-stage CNS-penetrant sGC stimulator that has shown rapid improvement in cerebral blood flow, functional brain connectivity, brain response to visual stimulus, cognitive performance, and biomarkers associated mitochondrial function and inflammation in clinical studies. CY3018 is a CNS-targeted sGC stimulator that preferentially localizes to the brain and has a pharmacology profile that suggests its potential for the treatment of neuropsychiatric diseases and disorders. On July 28, 2023, the Company sold Zagociguat and CY3018 to Tisento Therapeutics, Inc. ("Tisento"), a newly formed private company focused on their development, in which Cyclerion currently holds a 10% equity stake received in partial consideration of such sale. See "Asset Purchase Agreement" and "Note 14" below. Cyclerion is actively evaluating other activities aimed at enhancing shareholder value, which may potentially include collaborations, licenses, mergers, acquisitions and/or other targeted investments.
Cyclerion GmbH, a wholly owned subsidiary, was incorporated in Zug, Switzerland on May 3, 2019. The functional currency is the Swiss franc.
Cyclerion Securities Corporation, a wholly owned subsidiary, was incorporated in Massachusetts on November 15, 2019 and was granted securities corporation status in Massachusetts for the 2019 tax year. Cyclerion Securities Corporation has
Company Overview
The Company’s mission is to develop treatments for serious diseases.
Praliciguat is an orally administered, once-daily systemic sGC stimulator. On June 3, 2021, Cyclerion entered into a license agreement (as defined below) with Akebia relating to the exclusive worldwide license to Akebia of our rights to the development, manufacture, medical affairs and commercialization of pharmaceutical products containing praliciguat and other related products and forms thereof enumerated in such agreement. Cyclerion is eligible to receive up to $
Olinciguat is an orally administered, once-daily, vascular sGC stimulator that was evaluated in a Phase 2 study of participants with sickle cell disease. The Company released topline results from this study in October 2020. Cyclerion intends to out-license olinciguat to an entity with strong cardiovascular and/or cardiopulmonary capabilities.
Zagociguat and CY3018 are orally administered CNS-penetrant sGC stimulators. On July 28, 2023, the Company sold zagociguat and CY3018 to Tisento in exchange for $
10
Cyclerion continues to evaluate other activities aimed at enhancing shareholder value, which may potentially include collaborations, licenses, mergers, acquisitions and/or other targeted investments. No such activities are currently pending.
Stock Purchase Agreement
In March 2023, we entered into a stock purchase agreement with the CEO pursuant to which he invested $