☐

 ☐

☒

Definitive Proxy Statement

 ☐

 ☐

 ☐

☒

Fee paid previously with preliminary materials.

 ☐

1.

To authorize and approve the Asset Purchase Agreement, dated as of May 11, 2023 (the “Asset Purchase Agreement”), by and among JW Celtics Investment Corp., a Delaware corporation (“Buyer Parent”), JW Cycle Inc., a Delaware corporation (“Buyer” and collectively with Buyer Parent, the “Buyers”), and the Company, regarding the sale to Buyer of substantially all of the assets comprising the Company’s zagociguat (previously known as CY6463) and CY3018 programs, as contemplated by the Asset Purchase Agreement, and the other transactions contemplated by the Asset Purchase Agreement (the “Asset Sale Proposal”). We will retain the assets comprising our olinciguat, praliciguat and preclinical programs, and intend to maximize the value of these assets via out-licensing following the closing of the transaction;

(2)

To approve, for purposes of complying with the Nasdaq Listing Rules, the issuance of shares of common stock of the Company, without par value (the “Common Stock”) upon potential conversion of the shares of the Company’s Series A Convertible Preferred Stock, without par value (the “Cyclerion Preferred Stock”) issued by us to Peter M. Hecht, Ph.D., our Chief Executive Officer and member of the Board, pursuant to the terms of a Stock Purchase Agreement, dated as of March 31, 2023, to the extent that following such conversion Dr. Hecht would hold 20% or more of our outstanding Common Stock (the “Nasdaq Proposal”);

(3)

To authorize the Board of Directors to adjourn and postpone the special meeting to a later date or dates, if necessary, to allow time for further solicitation of proxies if there are not sufficient votes present in person or represented by proxy at the special meeting to approve the Asset Sale Proposal (the “Adjournment Proposal”); and

(4)

To transact any other business which properly may be brought before the special meeting or any adjournment or postponement thereof, including matters incidental to its conduct.

•

By Internet. You may vote by proxy via the Internet at www.proxyvote.com by following the instructions provided on the proxy card. You must have the control number that is on the proxy card when voting.

•

By Telephone. If you live in the United States or Canada, you may vote by proxy by calling toll-free 1-800-690-6903 and by following the instructions provided on the proxy card. You must have the control number that is on the proxy card when voting.

•

By Mail. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your proxy will be voted in accordance with your instructions. If you sign and return the enclosed proxy but do not specify how you want your shares voted, they will be voted in accordance with the recommendations of the Board and will be voted according to the discretion of the named proxy holders on the proxy card upon any other business that may properly be brought before the special meeting and at all adjournments and postponements thereof.

•

At the Virtual Special Meeting. The special meeting will be held entirely online. To participate in the special meeting, you will need the control number included on the proxy card. The special meeting webcast will begin promptly at 8:00 a.m., Eastern Time. We encourage you to access the special meeting prior to the start time. Online check-in will begin at 7:45 a.m., Eastern Time, and you should allow ample time for the check-in procedures.

•

By Internet or By Telephone. You will receive instructions from your bank, broker or other nominee if you are permitted to vote by Internet or telephone.

•

By Mail. You will receive instructions from your bank, broker or other nominee explaining how to vote your shares by mail.

•

At the Virtual Special Meeting. The special meeting will be held entirely online. To participate in the special meeting, you will need to contact the bank, broker or other nominee who holds your shares to obtain a broker’s proxy card and use the control number found on the broker’s proxy card. The special meeting webcast will begin promptly at 8:00 a.m., Eastern Time. We encourage you to access the special meeting prior to the start time. Online check-in will begin at 7:45 a.m., Eastern Time, and you should allow ample time for the check-in procedures.

1.

FOR the authorization and approval of the Asset Purchase Agreement, regarding the sale to Buyer of substantially all of the assets comprising the Company’s zagociguat (previously known as CY6463) and CY3018 programs, which may be deemed under Massachusetts law to be a sale of substantially all of our property and assets otherwise than in the usual and regular course of business, as contemplated by the Asset Purchase Agreement, and the other transactions contemplated by the Asset Purchase Agreement;

2.

FOR the approval, for purposes of complying with the Nasdaq Listing Rules, of the issuance of shares of Common Stock upon potential conversion of the shares of the Cyclerion Preferred Stock issued by us pursuant to the terms of a Stock Purchase Agreement, dated as of March 31, 2023, to the extent that following such conversion Dr. Hecht would hold 20% or more of our outstanding Common Stock;

3.

FOR the Board authorization to adjourn and postpone the special meeting to a later date or dates if there are insufficient votes to approve the Asset Sale Proposal; and

4.

In the proxy’s discretion with respect to any other business which is properly brought before the special meeting or any adjournment or postponement thereof, including matters incidental to its conduct.

1.

You may send in another proxy bearing a later date;

2.

You may send written notice (if the shareholder is an entity, by an officer or other authorized person of the entity) addressed to the Corporate Secretary at the Company’s principal executive and administrative offices before the special meeting that you are revoking your proxy; or

3.

You may attend the special meeting and vote online.

•

our shareholders failing to approve the Asset Sale Proposal and/or the Nasdaq Proposal;

•

the failure of one or more conditions to the closing of the Asset Sale Transaction to be satisfied or waived by the applicable party;

•

an increase in the amount of costs, fees, expenses and other charges related to the Asset Purchase Agreement or Asset Sale Transaction, including in connection with any litigation;

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the Asset Purchase Agreement;

•

risks arising from the diversion of management’s attention from our ongoing business operations;

•

risks associated with our ability to monetize the Retained Programs and/or to identify and realize business opportunities following the Asset Sale Transaction;

•

risks of losing key personnel or suppliers; and

•

the matters discussed under “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as amended and updated from time to time in the Company’s subsequent filings with the SEC.

•

the sale of the operations, assets and liabilities of the Company’s zagociguat (previously known as CY6463) and CY3018 programs pursuant to the Asset Purchase Agreement;

•

adjustments required to record the estimated impact of the proceeds received in connection with the Asset Sale Transaction, net of transaction costs; and

•

an adjustment to record the 10% equity investment in the Buyer that will be received pursuant to the Asset Purchase Agreement.

i.

Eliminate the assets and liabilities disposed of in the Asset Sale Transaction, which includes prepaid expenses, other current assets, accrued expenses, and accounts payable (in thousands):

ii.

Record (i) the expected net consideration received, (ii) the expected gain on the sale of the Purchased Assets, and (iii) impact of cash and cash equivalents pursuant to the terms of the Asset Purchase Agreement (in thousands):

(*)

The expected net gain on the sale of the Program Assets has not been reflected in the pro forma consolidated statements of operations as this amount relates to discontinued operations and does not impact income from continuing operations.

(**)

The consideration from the sale of Program Assets includes reimbursement from the Buyers for research and development expenses related to the Program Assets. Pro forma adjustments have not been reflected because there is no net effect on cash and cash equivalents.

iii.

To eliminate the operating activity directly attributable to the Program Assets, which includes revenue from grants, general and administrative, and research and development costs (in thousands):

iv.

To record the 10% equity investment in Buyer. The investment is expected to be accounted for under ASC 321. The investment has been initially measured at the expected fair value and subsequently measured at cost less impairment using the measurement alternative. No subsequent adjustments to the fair value have been assumed or reflected in the condensed consolidated statements of operations presented.

•

Buyer Parent Voting Agreement;

•

Buyer Parent Investor Rights Agreement;

•

Cyclerion Stockholder Letter; and

•

Buyer Parent Right of First Refusal and Co-Sale Agreement.

•

Zagociguat, previously known as CY6463, which is a CNS-penetrant sGC stimulator that has shown rapid and positive results in two different patient populations – improvements across a range of biomarkers reflecting multiple domains of disease activity, including mitochondrial disease-associated biomarkers, in patients with a primary mitochondrial disease as well as improvements in cognitive endpoints in cognitively impaired patients with schizophrenia.

•

CY3018, which is a CNS-targeted sGC stimulator in preclinical development that preferentially localizes to the brain and has a pharmacology profile that may suggest its potential for the treatment of neuropsychiatric diseases and disorders.

•

Praliciguat, which is discussed above and is now licensed to Akebia for advancement in rare kidney disease.

•

Olinciguat, which is a vascular sGC stimulator that Cyclerion intends to out-license for cardiovascular and/or cardiopulmonary diseases.

i.

reviewed the financial terms of the Asset Sale Transaction contained in a draft dated May 5, 2023 of the Asset Purchase Agreement and a draft dated May 8, 2023 of the Cyclerion Stockholder Letter;

ii.

reviewed certain publicly available financial and other information for the Company and certain other relevant financial and operating data regarding the Purchased Assets furnished to Stifel by the management of the Company;

iii.

reviewed and analyzed certain relevant historical financial and operating data concerning the Company furnished to Stifel by the management of the Company;

iv.

reviewed and analyzed certain internal financial analyses, financial projections, reports and other information concerning the Purchased Assets prepared by the management of the Company, including projections for the Purchased Assets provided by the management of the Company and reflecting the probabilities of success determined by the management of the Company and utilized per instruction of the Company;

v.

discussed with certain members of the management of the Company the historical and current business operations, financial condition and prospects of the Company with respect to the Purchased Assets and such other matters as Stifel deemed relevant;

vi.

participated in certain discussions and negotiations between representatives of the Company and Buyer and Buyer Parent;

vii.

reviewed the reported prices and trading activity of the equity securities of the Company;

viii.

reviewed and analyzed, based on the projections provided to Stifel by the management of the Company, the cash flows generated by the Purchased Assets to determine the present values of those discounted cash flows;

ix.

considered the results of the Company’s efforts and Stifel’s efforts, at the direction of the Company, to solicit indications of interest from selected third parties with respect to a transaction involving the Company; and

x.

reviewed and analyzed such other information and such other factors, and conducted such other financial studies, analyses and investigations, as Stifel deemed relevant for purposes of Stifel’s opinion. In addition, Stifel took into account its assessment of general economic, market and financial conditions and Stifel’s experience in other transactions, as well as Stifel’s experience in securities valuations and its general knowledge of the industry in which the Company operates.

(1)

Unlevered Free Cash Flow was estimated based on 27.3% tax rate, 20% net working capital requirement, and usage of future net operating losses

(1)

Unlevered Free Cash Flow was estimated based on 27.3% tax rate, 20% net working capital requirement, and usage of future net operating losses

•

that the Consideration represents a fair valuation of the Purchased Programs and that the Company will have a better chance of increasing shareholder value by selling the Purchased Programs in this transaction than it would if it retained the Purchased Programs given the significant cash needed to support their ongoing development and the significant dilution that would have been required to obtain sufficient capital, to the extent such capital could even be raised;

•

the view of the Independent Board that, following the proposed Asset Sale Transaction, the Company will have a viable business plan to pursue, albeit with a smaller management team;

•

that the cash proceeds from the Asset Sale Transaction will provide the Company with critical financial liquidity and flexibility, which is important to the Company and its shareholders in order to provide the Company with the opportunity to maximize value of its Retained Programs via out-licensing, while pursuing other initiatives intended to increase shareholder value;

•

that following the engagement of Stifel on May 1, 2022, to explore strategic alternatives, Stifel and management contacted 65 potential counterparties for a strategic transaction, management representatives contacted an additional 25 potential counterparties for such a transaction, 30 potential counterparties had signed non-disclosure agreements with respect to such a transaction, and ultimately the only potential transaction that remained was the proposed Asset Sale Transaction;

•

that, as of the most recent quarter end prior to Independent Board approval, the Company had cash and cash equivalents of only approximately $7.0 million dollars, with a continuing burn rate and the need to retain employees to facilitate any out-licensing transaction, sale of assets or other transaction;

•

the fact that if the Asset Sale Transaction were not completed, and if the Company were unable to secure an alternative source of working capital or to enter into an alternative strategic transaction, then the Company likely would be forced to curtail operations or resort to bankruptcy protection;

•

that the shares of common stock in Buyer Parent that the Company receives will enable the Company’s shareholders to indirectly participate in the financial upside of any future development of the Purchased Programs by Buyers;

•

the Stifel Opinion received by the Independent Board, dated May 10, 2023, that, as of the date thereof, the Consideration to be received by the Company from Buyer in the Asset Sale Transaction pursuant to the Asset Purchase Agreement was fair to the Company, from a financial point of view;

•

historical information regarding (i) the Company’s business, financial performance and results of operations, (ii) market prices, volatility and trading activity with respect to the Company’s Common Stock, and (iii) market prices with respect to other industry participants and general market indices;

•

current information regarding (i) the Company’s business, prospects, financial condition, operations, technology, products, services, management, competitive position and strategic business goals and objectives, (ii) general economic, industry and financial market conditions, (iii) opportunities and competitive factors within the Company’s industry and (iv) the Company’s current financial and cash positions;

•

that following the consummation of the Asset Sale Transaction, Cyclerion may be deemed an investment company and subjected to related restrictions under the Investment Company Act of 1940;

•

the potential for other third parties to enter into strategic relationships with or to seek to acquire the Company or a significant portion of the assets of the Company, including a review of management’s

•

the Independent Board’s belief that the Asset Sale Transaction was more favorable to the Company’s shareholders than any other alternative reasonably available to the Company and its shareholders, including the alternative of retaining the Purchased Programs based upon: (i) the Independent Board’s knowledge of the current and prospective environment in which the Company operates, the competitive environment, the Company’s overall strategic position, and the challenges attendant to improving the Company’s financial performance in order to maximize shareholder value; (ii) the Independent Board’s understanding of the Company’s business, operations, management, financial condition, earnings and prospects; and (iii) the Company’s current financial and cash positions;

•

the fact that, pursuant to the Asset Purchase Agreement, Buyer will assume the Assumed Liabilities (as defined in the Asset Purchase Agreement) and will pay, perform and discharge the Assumed Liabilities listed in the Asset Purchase Agreement;

•

the fact that, pursuant to the Asset Purchase Agreement, the Company will retain the Excluded Liabilities (as defined in the Asset Purchase Agreement);

•

the fact that the Asset Sale Transaction will be taxable and the Company has certain net operating losses;

•

the belief of the Independent Board that continuing with the strategic process would not result in a transaction at a more attractive price than the purchase price;

•

the belief of the Independent Board that the Asset Sale Transaction has a reasonable likelihood of closing without material potential issues under applicable antitrust laws or material potential issues from any governmental authorities;

•

the possible effects of the Asset Sale Transaction and public announcement of the Asset Sale Transaction on the Company’s financial performance, operating results and stock price and the Company’s relationships with suppliers and other business partners, management and employees;

•

the fact that the Asset Purchase Agreement precludes the Company from actively soliciting competing acquisition proposals;

•

the fact that the Asset Purchase Agreement imposes restrictions on the conduct of the Company’s business in the pre-closing period, which may adversely affect the Company’s business in the event the Asset Sale Transaction is not completed (including by delaying or preventing the Company from pursuing business opportunities that may arise or precluding actions that would be advisable if the Company were to remain an independent company), and which may significantly restrict the operation of the Company’s business;

•

the risks involved with the Asset Sale Transaction and the likelihood that the Company and Buyers will be able to complete the Asset Sale Transaction, the possibility that the Asset Sale Transaction might not be consummated and the Company’s prospects going forward;

•

the substantial transaction expenses to be incurred in connection with the Asset Sale Transaction and the negative impact of such expenses on the Company’s cash reserves and operating results should the Asset Sale Transaction not be completed; and

•

the fact that Dr. Hecht, our Chief Executive Officer and member of the Board, and Mr. McGuire, a member of the Board, each have certain interests in the transactions contemplated by the Asset Purchase Agreement and the Nasdaq Proposal as more fully described in the Sections “Proposal No. 1: The Asset Sale Proposal — Interests of Certain Persons in the Asset Sale Transaction” and “Proposal No. 2: The Nasdaq Proposal — Interest of our Chief Executive Officer in the Nasdaq Proposal”, beginning on pages 21 and 57 , respectively.

•

where the Appraisal Form must be returned, where certificates for certificated shares must be deposited and the date by which such certificates must be deposited (the “Certificate Deposit Deadline”);

•

the date by which the Appraisal Form must be received by Cyclerion (the “Appraisal Form Deadline”), which may not be fewer than 40 nor more than 60 days after the date the Appraisal Notice and Appraisal Form are sent, and that the shareholder shall have waived the right to demand appraisal with respect to such shares unless the Appraisal Form is received by Cyclerion by such specified date;

•

Cyclerion’s estimate of the “fair value” of the shares of Cyclerion’s Common Stock, as determined in accordance with the Massachusetts Appraisal Rights Statutes, as described below;

•

that, if requested in writing, Cyclerion will provide within 10 days after the Appraisal Form Deadline, the number of shareholders who have returned the Appraisal Forms by the Appraisal Form Deadline and the total number of shares owned by such shareholders; and

•

the date by which the shareholder may withdraw his, her or its notice of intent to demand payment, which date must be within 20 days after the Appraisal Form Deadline (the “Withdrawal Deadline”).

•

the required financial statements of Cyclerion;

•

a statement of Cyclerion’s estimate of the fair value of the shares of Cyclerion Common Stock (as determined in accordance with the Massachusetts Appraisal Rights Statutes, as described above), which estimate must equal or exceed Cyclerion’s estimate given with the Appraisal Notice; and

•

a statement that the shareholder has the right to demand further payment in accordance with the procedures set forth in Section 13.26 of the MBCA, as described below, and that, if the shareholder does not do so within the time period specified therein, such shareholder will be deemed to have accepted the payment in full satisfaction of Cyclerion’s obligations under the Massachusetts Appraisal Rights Statutes.

•

of Cyclerion’s estimate of the fair value of the shares (as determined in accordance with the Massachusetts Appraisal Rights Statutes, as described above), which estimate must equal or exceed the estimate given with the Appraisal Notice;

•

that the shareholders may accept such fair value, plus interest, in full satisfaction of their demands or demand appraisal under Section 13.26 of the MBCA, as described below;

•

that those shareholders who wish to accept Cyclerion’s offer must notify Cyclerion of their acceptance within 30 days after receiving the offer; and

•

that those shareholders who do not satisfy the requirements for demanding appraisal under Section 13.26 of the MBCA will be deemed to have accepted Cyclerion’s offer.

•

Intellectual Property rights owned by Cyclerion that are primarily related to the research, development, manufacture, commercialization, or other exploitation of the Purchased Programs, and, except to the extent constituting an Excluded Asset, all claims and causes of action with respect to any of the foregoing, whether accruing before, on, or after the Closing Date, including all rights to and claims for damages, restitution and injunctive and other legal and equitable relief for past, present, and future infringement, misappropriation or violation thereof;

•

Contracts to which Cyclerion is a party to the extent primarily related to the research, development, manufacture or commercialization of the Purchased Programs (the “Assumed Contracts”);

•

all physical assets, wherever located, that are used or held for use primarily in connection with the Purchased Programs;

•

inventories used, held for use, or intended to be used primarily in operating or developing the Purchased Programs, wherever located, including inventories of raw materials, finished goods, drug substance, intermediates, operating supplies, work-in-process, products, supplies, packaging, packaging materials, parts and other inventories used, held for use, or intended to be used in operating or developing the Purchased Programs, and of the foregoing being held on consignment, bailment, or other arrangement;

•

books and records relating to the Purchased Assets, including all technical literature used primarily for the Purchased Programs and all rights to receive mail (including e-mail) and other communications related to the Purchased Programs (including mail (including e-mail) and communications from suppliers and others with respect to the Purchased Programs);

•

all INDs, Permits and regulatory documentation with respect to the Purchased Programs (including any drug designations), all correspondence with the FDA or other Governmental Entity regarding the Purchased Programs, all preclinical and clinical study data supporting the Purchased Programs and all related historical safety and pharmacovigilance data, provided that Cyclerion will have the right to make copies of all such records and will retain the right to access and use any such records following the closing;

•

all personnel files for the Transferred Employees;

•

all claims, causes of action, defenses and rights of offset or counterclaim against Third Parties primarily related to any Purchased Asset or any Assumed Liability, except to the extent constituting an Excluded Asset; and

•

all goodwill primarily associated with the foregoing categories of Purchased Assets.

•

all cash and cash equivalents of Cyclerion, together with all rights to all bank accounts of Cyclerion;

•

all accounts receivable of Cyclerion;

•

all minute books, organizational documents, stock registers and such other books and records of Cyclerion that pertain to the ownership, organization and existence of Cyclerion and its Subsidiary;

•

all personnel files for all current and former employees of Cyclerion who do not become Transferred Employees;

•

all assets and Contracts related to, or assets held with respect to, the benefit plans of Cyclerion;

•

all rights of Cyclerion under the Transaction Agreements;

•

all Contracts of Cyclerion and its Subsidiary that are not Assumed Contracts (the “Excluded Contracts”);

•

all insurance policies and related Contracts of Cyclerion and all rights thereunder (including the right to make claims thereunder and to the proceeds thereof);

•

all assets, properties and rights, including all Contracts, primarily related to Cyclerion's business other than the Purchased Assets;

•

all abandoned or unclaimed property reportable under any state or local unclaimed property, escheat or similar law and associated with periods prior to the Closing Date;

•

all Intellectual Property rights owned or controlled by Cyclerion that are not primarily related to the research, development, manufacture, commercialization and other exploitation of the Purchased Programs, and all the goodwill associated therewith;

•

Cyclerion’s or its Subsidiary’s claims, causes of action, defenses and rights of offset or counterclaim against third parties not primarily related to any Purchased Asset or any Assumed Liability, as well as any claims, defenses, rights of offset or counterclaims made by Cyclerion or its Subsidiary against Third Parties related to any Purchased Assets but only to the extent set forth in the Disclosure Schedules;

•

all Joint Confidentiality Agreements, all bids and expressions of interest received from third parties with respect to the Purchased Assets (but excluding any confidentiality agreement that exclusively relates to the Purchased Programs);

•

all privileged materials, documents and records of Cyclerion or Cyclerion’s Subsidiary that are not related to the Purchased Assets;

•

all Tax assets of Cyclerion or its Subsidiary, or that relate to the Purchased Assets for a Pre-Closing Tax Period, including (i) Tax losses, refunds, credits, credit carry forwards and other Tax attributes, (ii) all deposits, prepaid or advance payments with respect to Taxes, and (iii) any claims, rights, and interest in and to any Tax asset, refund, credit, deduction or reduction of Taxes; and

•

all Tax Returns, Tax information and Tax records related to Cyclerion or its Affiliates.

•

all Liabilities and obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, Cyclerion or the Purchased Assets as operated prior to the Closing Date, or the ownership, possession, use, operation or sale or other disposition prior to the Closing Date of any of the Purchased Assets (other than the PTC Grant, the Employee Expenses and R&D Expenses);

•

all Liabilities based upon, arising out of or otherwise in respect of any employment, compensation, equity-based, incentive or other benefit plans, contracts, programs or agreements of Cyclerion, other than the Employee Expenses;

•

all Liabilities based upon, arising out of or otherwise in respect of any current or former employees, independent contractors, consultants, or other service providers of Cyclerion or any other member of its Group regardless of whenever occurring, other than (i) the Employee Expenses and (ii) solely with respect to the period following the closing (or, if later, the date a Transferred Employee becomes employed by Buyer or its Affiliates, except for the Employee Expenses related to any Inactive Employees who become Transferred Employees with respect to the period following the closing), Liabilities related to the employment or termination of employment of the Transferred Employees;

•

except as otherwise provided in the Asset Purchase Agreement, all Liabilities for (i) Taxes of Cyclerion (or its Subsidiary) or (ii) Taxes relating to the Purchased Assets for any Pre-Closing Tax Period;

•

all Liabilities arising in connection with, or relating to, any real property owned, leased or otherwise used or occupied by Cyclerion or its Subsidiary;

•

all royalties or other Liabilities owed under the Excluded Contracts; and

•

all Liabilities relating to abandoned or unclaimed property reportable under any state or local unclaimed property, escheat or similar law where the dormancy period elapsed on or prior to the Closing Date.

•

pay the Company (i) $8.0 million at the closing, plus (ii) the amount of any Employee Expenses or R&D Expenses for which Buyers are obligated to reimburse the Company pursuant to the Asset Purchase Agreement to the extent such amounts remain unpaid as of the closing of the Asset Sale Transaction; and

•

deliver to the Company a number of shares of common stock, par value $0.0001 per share, of Buyer Parent, such that following the issuance thereof, such shares comprise 10% of the issued and outstanding shares of Buyer Parent immediately following the closing of the Asset Sale Transaction, subject to certain protections against dilution specified in the Cyclerion Stockholder Letter.

•

Incorporation; Authority

•

The Purchased Assets

•

Compliance with Law

•

Consents and Approvals; No Conflicts

•

Contracts

•

Assigned Intellectual Property

•

Licenses, Permits and Authorizations

•

Taxes

•

Broker Fees

•

Representations with Respect to Consideration Shares

•

Incorporation; Ownership and Authority

•

Capitalization

•

No Operations

•

Consents and Approvals; No Violations

•

Financing

•

Broker’s Fees

•

Operation of the Business

•

Corporate Examinations and Investigations

•

Know-How Licenses

•

Efforts

•

Employee Matters

•

Use of Retained Names and Marks

•

Interim Period Preclinical and Clinical Trial Activities

•

Exclusivity, as described in the Section entitled “Exclusivity” beginning on page 52

•

Matters related to Cyclerion Shareholders Meeting

•

Buyer Parent Stock Purchase Agreement

•

Taxes

•

FDA Letters

•

The matters described in the Section entitled “Post-Closing Arrangements” beginning on page 54

•

Joint Confidentiality Agreements

•

there will be no law of any nature issued by a Governmental Entity of competent jurisdiction that restrains, enjoins or otherwise prohibits, or has the effect of restraining, enjoining or otherwise prohibiting, the transactions contemplated by any Transaction Agreement from being consummated as provided in the Asset Purchase Agreement;

•

approval of the Asset Sale Transaction by the holders of a majority of the outstanding shares of the Company’s Common Stock shall have been obtained;

•

the parties having delivered letters to the FDA with respect to the transfer from Cyclerion to Buyer of (i) the INDs relating to the Purchased Programs and (ii) the orphan drug designations relating to the Purchased Programs; and

•

the Novation and Waiver Agreement is in full force and effect, has not been amended or modified in any respect (except with the express written consent of Cyclerion and Buyer), and there is no dispute, outstanding with respect thereto.

•

At the closing of the Asset Sale Transaction, Cyclerion shall deliver or have caused to be delivered to Buyer the following:

○

○

○

○

○

•

The representations and warranties of Cyclerion contained in the Asset Purchase Agreement (i) that are qualified or limited by materiality or “Material Adverse Effect” shall be true and correct as of the closing with the same effect as if made as of the closing (other than such representations that are made as of a specified date, which shall be true and correct on and as of such date) and (ii) that are not so qualified or limited shall be true and correct in all material respects as of the closing with the same effect as if made as of the closing (other than such representations that are made as of a specified date, which shall be true and correct in all material respects as of such date).

•

Cyclerion shall have performed and complied in all material respects with all covenants and agreements required by the Asset Purchase Agreement to be performed or complied with by it at or prior to the closing. For purposes of this condition, a covenant of Cyclerion shall only be deemed to have not been performed if Cyclerion has materially breached such covenant and failed to cure within 15 calendar days after notice (or if earlier, the Termination Date); provided that Buyer shall not be required to consummate the closing unless and until such material breach of any covenant has been cured.

•

Since the date of the Asset Purchase Agreement, there shall not have occurred and be continuing a Material Adverse Effect.

•

At the closing of the Asset Sale Transaction, Buyers shall deliver or have caused to be delivered to Cyclerion the following:

○

○

○

○

○

○

○

•

The representations and warranties of Buyers contained in the Asset Purchase Agreement (i) that are qualified or limited by materiality or “Material Adverse Effect” shall be true and correct as of the closing with the same effect as if made as of the closing (other than such representations that are made as of a specified date, which shall be true and correct on and as of such date) and (ii) that are not so qualified or limited shall be true and correct in all material respects as of the closing with the same effect as if made as of the closing (other than such representations that are made as of a specified date, which shall be true and correct in all material respects as of such date).

•

Buyers shall have performed and complied in all material respects with all covenants and agreements required by the Asset Purchase Agreement to be performed or complied with by Buyer and Buyer Parent, as applicable, at or prior to the closing. For purposes of this condition, a covenant of Buyer or Buyer Parent shall only be deemed to have not been performed if Buyer or Buyer Parent, as applicable, has materially breached such covenant and failed to cure within 15 calendar days after notice (or if earlier, the Termination Date); provided that Cyclerion shall not be required to consummate the closing unless and until such material breach of any covenant has been cured.

•

by the mutual written agreement of the Company and Buyer;

•

by either party upon notice to the other if the transactions contemplated by the Asset Purchase Agreement have not been consummated by the Termination Date; provided that such right to terminate is not available to any party whose breach of any provision of the Asset Purchase Agreement has primarily caused or primarily resulted in the failure of the transactions to be consummated by such time;

•

by Buyer if neither Buyer Parent nor Buyer is then in breach of any provision of the Asset Purchase Agreement that would lead any closing condition for the benefit of the Company not to be satisfied, if any representation or warranty made by the Company shall have become untrue or the Company shall have failed to perform any covenant or agreement set forth in the Asset Purchase Agreement, such that any closing condition for the benefit of Buyers would not be satisfied and such condition is incapable of being satisfied by the Termination Date, and the Company has not cured such breach within 20 days of Buyer’s written notification of such breach;

•

by the Company if the Company is not then in breach of any provision of the Asset Purchase Agreement that would lead any closing condition for the benefit of Buyers not to be satisfied, if any representation or warranty made by Buyer or Buyer Parent shall have become untrue or either of them shall have failed to perform any covenant or agreement set forth in the Asset Purchase Agreement, such that any closing condition for the benefit of the Company would not be satisfied and such condition is incapable of being satisfied by the Termination Date, and Buyer or Buyer Parent has not cured such breach within 20 days of the Company’s written notification of such breach;

•

by either party if the special meeting to which this proxy statement relates (including any adjournment or postponement thereof in accordance with the terms of the Asset Purchase Agreement) has concluded, our shareholders have voted, and the approval for the Asset Sale Proposal was not obtained;

•

by either party if any law or government order of any nature has been promulgated or issued that enjoins or otherwise prohibits, or has the effect of enjoining or otherwise prohibiting, the Asset Sale Transaction from being consummated, unless such party’s failure to fulfill or comply with any obligation or covenant under the Asset Purchase Agreement has been the cause of, or resulted in, such law or order;

•

by the Company if, after the sixth business day following the public announcement of the execution of the Asset Purchase Agreement, certain payments pursuant to the Stock Purchase Agreement, dated as of March 31, 2023 between Cyclerion and Dr. Peter M. Hecht have not been paid (which termination right is no longer available given such payments were made);

•

by the Company if all closing conditions for the benefit of Buyers have been satisfied on the date the closing should have been consummated by Buyers pursuant to the Asset Purchase Agreement, the Company has notified Buyer in writing thereof and that it stands ready, willing and able to close, and Buyer or Buyer Parent has failed to consummate the closing within two business days after the delivery of such notification; or

•

by Buyer if a Cyclerion Adverse Recommendation Change has been made, by delivering notice of such termination to the Company within 10 business days of such Cyclerion Adverse Recommendation Change.

•

Subject to the limitations in the Asset Purchase Agreement, we have agreed to indemnify Buyer Parent and each subsidiary of Buyer Parent and other related persons for any damages incurred by any of them in connection with (i) the Excluded Liabilities, including our failure to discharge any Excluded Liability, (ii) our breach of any covenants or agreements under the Asset Purchase Agreement or any other transaction agreement which require performance following the closing, and (iii) certain matters with respect to the deferred transfer of assets to Buyer.

•

Subject to the limitations in the Asset Purchase Agreement, Buyers have agreed to indemnify us and other related persons for any damages incurred by us or any of them in connection with (i) the Assumed Liabilities, including their failure to discharge any Assumed Liability, (ii) Buyers’ breach of any covenants or agreements under the Asset Purchase Agreement or any other transaction agreement which require performance following the closing, (iii) certain matters with respect to the deferred transfer of assets to Buyer and (iv) certain licensing matters.

•

Generally, the parties will each perpetually maintain in confidence, and cause their respective representatives to maintain in confidence, any confidential information of the other party or obtained from the other party (with certain limited exceptions).

•

The parties will provide each other with certain information relevant to the transaction, subject to the terms, conditions and limitations set forth in the Asset Purchase Agreement.

•

The Company will not and will cause its affiliates not to, (i) directly or indirectly, for the period of five years from the closing of the Asset Sale Transaction, initiate IND-enabling preclinical development, develop, commercially manufacture, commercialize, or otherwise exploit any compound or product (including any compound or product that is part of an Excluded Program) that is (A) a CNS-penetrant sGC Stimulator, (B) developed for the treatment of any neuropsychiatric, neurodegenerative and primary mitochondrial genetic disease or disorder, as well as stroke and stroke recovery, and (C) a Cyclerion Competing Product anywhere in the world, or (ii) license, convey, grant, or otherwise transfer any rights to any third party (including any rights under any Intellectual Property included in the Excluded Assets) to initiate IND-enabling preclinical development, develop, commercially manufacture, commercialize, or otherwise exploit a Cyclerion Competing Product anywhere in the world; provided, however, if there is a change of control of Cyclerion, the foregoing restrictions generally do not apply to affiliates of Cyclerion’s acquiror if Cyclerion segregates confidential information it has with respect to the Purchased Programs.

•

Each of Buyer and Cyclerion, effective as of the closing, grant to the other a perpetual, irrevocable, worldwide, non-exclusive, royalty-free license to any know-how included in the Purchased Assets and Excluded Assets, respectively, in each case, solely to develop, manufacture, commercialize, or otherwise exploit, the Excluded Programs existing as of the Closing Date and the Purchased Programs, respectively.

•

Mr. McGuire is a Founding Partner of Polaris Partners. He currently beneficially owns, including through his interests in entities affiliated with Polaris Partners 1.6% of our Common Stock. Investment funds affiliated with Polaris Partners have subscribed for shares of Series A Preferred Stock in Buyer Parent pursuant to the Buyer Parent Stock Purchase Agreement, which, following the closing of the Asset Sale Transaction, would result in investment funds affiliated with Polaris Partners holding approximately 4.0% of the fully diluted shares of Buyer Parent.

•

Dr. Hecht currently beneficially owns approximately 19.9% of our Common Stock, which includes shares he has (or will have within 60 days of June 15, 2023) the right to acquire through conversion or exercise of stock options and Cyclerion Preferred Stock. He owns 351,037 shares of our non-voting Cyclerion Preferred Stock, constituting all of the outstanding shares of that class. He has subscribed for shares of Series A Preferred Stock in Buyer Parent pursuant to the Buyer Parent Stock Purchase Agreement, which, following the closing of the Asset Sale Transaction, would result in Dr. Hecht holding approximately 7.8% of the fully diluted shares of Buyer Parent.

•

Dr. Hecht will become the Chief Executive Officer and a member of the Board of Directors of Buyer Parent upon the closing of the Asset Sale Transaction and will receive equity securities in Buyer Parent as part of his compensation. Dr. Hecht will resign as the Company’s Chief Executive Officer but will remain a member of the Board upon the closing of the Asset Sale Transaction.

•

each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our Common Stock;

•

each of our executive officers and directors; and

•

all of our executive officers and directors as a group.

*

Less than 1% of outstanding shares

(1)

Includes (a) 110,364 shares of Common Stock issuable to Dr. Hecht upon the exercise of options that are exercisable within 60 days following June 15, 2023 and (b) 82,354 shares of Common Stock that Dr. Hecht has the right to acquire upon conversion of shares of Cyclerion Preferred Stock that are not currently subject to conversion limits under the Nasdaq Listing Rules.

(2)

Includes 17,003 shares of Common Stock issuable to Ms. Gault upon the exercise of options that are exercisable within 60 days following June 15, 2023.

(3)

Includes 9,739 shares of Common Stock issuable to Ms. Gjino upon the exercise of options that are exercisable within 60 days following June 15, 2023.

(4)

Includes 2,500 shares of Common Stock issuable to Mr. McGuire upon the exercise of options that are exercisable within 60 days following June 15, 2023. Includes 552 shares held by Mr. McGuire, 34,865 shares of Common Stock held by Polaris Partners VIII, L.P., 1,247 shares of Common Stock held by Polaris Entrepreneurs Fund VIII, L.P., 8 shares of Common Stock held by Polaris Venture Management Co. II, L.L.C. and 345 shares of Common Stock held by Bartlett Partners, LLC. Mr. McGuire is a managing member of Bartlett Partners, LLC and Polaris Venture Management Co. II, L.L.C. and has shared voting and investment authority over these shares.

(5)

Includes 2,500 shares of Common Stock issuable to Dr. Isacson upon the exercise of options that are exercisable within 60 days following June 15, 2023.

(6)

Includes 1,553 shares of Common Stock issuable to Dr. Hyman upon the exercise of options that are exercisable within 60 days following June 15, 2023.

(7)

Includes 1,500 shares of Common Stock issuable to Dr. De Souza upon the exercise of options that are exercisable within 60 days following June 15, 2023.

(8)

Based solely upon the information provided by Slate Path Capital LP (“Slate Path”), in a Schedule 13G filed on January 13, 2023, reporting as of December 31, 2022. Slate Path is the investment manager of Slate Path Master Fund LP (the “Slate Path Fund”) and, accordingly, may be deemed to beneficially own the shares held directly by the Slate Path Fund. David Greenspan (“Mr. Greenspan”) is the managing partner of Jades GP, LLC, which is the general partner of Slate Path, and, accordingly, may be deemed to beneficially own the shares held directly by the Slate Path Fund.

(9)

Based solely upon the information provided by FMR LLC (“FMR”) in a Schedule 13G/A filed on February 9, 2023, reporting as of December 31, 2022. FMR has beneficial ownership of all the shares, for which it has sole voting power and sole dispositive power with respect to all of the shares. FMR reported its beneficial ownership on behalf of itself, Fidelity Management & Research Company LLC, Fidelity Management Trust Company and Strategic Advisors LLC. Ms. Abigail Johnson is also deemed to be the beneficial owner of these shares as the director and managing member of FMR.

(10)

Based solely upon the information provided by MFN Partners, LP (“MFN”), in a Schedule 13G/A filed on February 9, 2022, reporting as of December 31, 2021. The general partner of MFN is MFN Partners GP, LLC (“MFN GP”). The Investment manager of MFN is MFN Partners Management, LP (“MFN Management”). The general partner of MFN Management is MFN Partners Management, LLC (“MFN LLC”). Farhad Nanji and Michael DeMichele are members of MFN GP and MFN LLC.

(11)

Based solely upon the information provided by Artal International S.C.A. in a Schedule 13G/A filed on February 11, 2022, reporting as of December 31, 2021. Invus Public Equities, L.P. (“Invus Public Equities”) directly held 2,768,069 shares. Invus Public Equities Advisors, LLC (“Invus PE Advisors”), as the general partner of Invus Public Equities, controls Invus Public Equities and, accordingly, may be deemed to beneficially own the shares held by Invus Public Equities. Artal Treasury Limited (“Artal Treasury”), as the managing member of Invus PE Advisors, controlled Invus PE Advisors and, accordingly, may be deemed to beneficially own the shares that Invus PE Advisors may be deemed to beneficially own. Invus, L.P. directly held 11,053 shares. Invus Advisors, L.L.C. (“Invus Advisors”), as the general partner of Invus, L.P., controls Invus, L.P. and, accordingly, may be deemed to beneficially own the shares held by Invus, L.P. Artal International S.C.A. (“Artal International”), (i) as its Geneva branch is the sole shareholder of Artal Treasury, controls Artal Treasury and, accordingly, may be deemed to beneficially own the 2,768,069 shares that Artal Treasury may be deemed to beneficially own, and (ii) as the managing member of Invus Advisors, controls Invus Advisors and, accordingly, may be deemed to beneficially own the 11,053 shares that Invus Advisors may be deemed to beneficially own. Artal International Management S.A. (“Artal International Management”), as the managing partner of Artal International, controls Artal International and, accordingly, may be deemed to beneficially own the shares that Artal International may be deemed to beneficially own. Artal Group, as the parent company of Artal International Management, controls Artal International Management and, accordingly, may be deemed to beneficially own the shares that Artal International Management may be deemed to beneficially own. Westend S.A. (“Westend”), as the parent company of Artal Group S.A. (“Artal Group”), controls Artal Group and, accordingly, may be deemed to beneficially own the shares that Artal Group may be deemed to beneficially own. Stichting Administratiekantoor Westend (the “Stichting”), as the majority shareholder of Westend, controls Westend and, accordingly, may be deemed to beneficially own the shares that Westend may be deemed to beneficially own. Mr. Wittouck, as the sole member of the board of the Stichting, controls the Stichting and, accordingly, may be deemed to beneficially own the shares that the Stichting may be deemed to beneficially own. Effective as of February 9, 2022, in connection with an internal reorganization, Artal Treasury ceased to be the managing member of Invus PE Advisors, and the Geneva branch of Artal International, the sole shareholder of Artal Treasury, became the managing member of Invus PE Advisors and, accordingly, may be deemed to beneficially own the shares that Invus PE Advisors may be deemed to beneficially own. Effective as of such date, Artal Treasury is no longer deemed to beneficially own the shares that Invus PE Advisors may be deemed to beneficially own.

(12)

Based solely upon the information provided by American Endowment Foundation in a Schedule 13G/A filed on February 5, 2021, reporting as of December 31, 2020.

•

Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 22, 2023;

•

Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the SEC on May 12, 2023;

•

Proxy Statement for the annual meeting of our shareholders held on May 15, 2023, filed with the SEC on Schedule 14A on April 3, 2023; and

•

Current Reports on Form 8-K filed with the SEC on April 3, May 12, May 15, May 25 and June 1, 2023.