SEC Filing | Cyclerion Therapeutics, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38787

CYCLERION THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Massachusetts (State or other jurisdiction of incorporation or organization)		83-1895370 (I.R.S. Employer Identification No.)

245 First Street, 18th Floor, Cambridge, Massachusetts (Address of principal executive offices)		02142 (Zip Code)

(857) 327-8778

Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	CYCN	The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller reporting company ☒

		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 9, 2023, the registrant had 2,445,096 shares of common stock, no par value, outstanding.

CYCLERION PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for Three and Nine Months Ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity for Three and Nine Months Ended September 30, 2023 and 2022	7
	Condensed Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2023 and 2022	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	33

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:

•

there is substantial doubt regarding our ability to continue as a going concern;

•

the timing, investment and associated activities involved in developing, obtaining regulatory approval for, launching and commercializing any current or future product candidates;

•

the uncertainty as to any liquidity or monetizable value of our equity interest in Tisento, which faces all the risks of an early-stage pharmaceutical development company;

•

our relationships with third parties, collaborators and our employees;

•

our ability to execute our strategic priorities;

•

our ability to finance our operations and business initiatives;

•

the success of collaboration or license agreements of our product candidates;

•

our ability to access capital, capabilities, and transactions necessary to advance the development of our assets;

•

whether the praliciguat out-license will result in the creation of any therapies;

•

whether any development, regulatory, and commercialization milestones or royalty payments provided for in the agreement with Akebia (as defined below in Note 1 to the Condensed Consolidated Financial Statements) will be achieved;

•

the impact on our business of workforce and expense reduction initiatives;

•

a determination that we constitute an investment company under the Investment Company Act of 1940, as amended, and if we are required to register thereunder, would have a material adverse effect on us;

•

our or our partners' plans with respect to the development, manufacture or sale of any current or future product candidates and the associated timing thereof, including the design and results of pre-clinical and clinical studies;

•

the safety profile and related adverse events of any current or future product candidates;

•

the efficacy and perceived therapeutic benefits of any current or future product candidates, their potential indications and their market potential;

•

U.S. and non-U.S. regulatory requirements for any current or future product candidates, including any post-approval development and regulatory requirements, and the ability of any current or future product candidates to meet such requirements;

•

our ability to attract and retain employees needed to execute our business plans and strategies and our ability to manage the impact of any loss of key employees;

•

our ability to obtain and maintain intellectual property protection for our product candidates and the strength thereof;

•

our future financial performance, revenues, expense levels, payments, cash flows, profitability, tax obligations, capital raising and liquidity sources, and concentration of voting control, as well as the timing and drivers thereof, and our ability to maintain effective internal control over financial reporting;

•

our ability to compete with other companies that are or may be developing or selling products that are competitive with any current or future product candidates;

•

the impact of government regulation in the life sciences industry, particularly with respect to healthcare reform;

•

the potential we could be delisted from Nasdaq;

•

trends and challenges in the markets for our potential products.

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 in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 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.

Cyclerion Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share data)

(Unaudited)


	September 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	9,108		$	13,382
Accounts receivable		—			96
Prepaid expenses		726			805
Other current assets		30			537
Total current assets		9,864			14,820
Operating lease right-of-use asset		—			1,218
Other investment		5,350			—
Other assets		—			2,041
Total assets	$	15,214		$	18,079
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	814		$	2,970
Accrued research and development costs		362			2,275
Accrued expenses and other current liabilities		1,165			2,382
Total current liabilities		2,341			7,627
Commitments and contingencies (Note 8)		—			—
Stockholders' equity
Preferred shares, no par value, 500,000 shares authorized and 351,037 series A convertible preferred stock issued and outstanding at September 30, 2023		—			—
Common stock, no par value, 20,000,000 shares authorized and 2,445,096 issued and outstanding at September 30, 2023 and 20,000,000 shares authorized and 2,175,936 issued and outstanding at December 31, 2022 (*)		—			—
Paid-in capital		275,614			269,626
Accumulated deficit		(262,723	)		(259,154	)
Accumulated other comprehensive loss		(18	)		(20	)
Total stockholders' equity		12,873			10,452
Total liabilities and stockholders' equity	$	15,214		$	18,079

*Adjusted retroactively for reverse stock split - see Note 1

The accompanying notes are an integral part of these condensed consolidated financial statements.

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands except per share data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Revenue from development agreement	$	—		$	—		$	—		$	297
Total revenues		—			—			—			297
Cost and expenses:
Research and development		580			1,414			1,491			4,803
General and administrative		2,131			3,104			6,361			9,579
Impairment loss		3,304			—			3,304			—
Total cost and expenses		6,015			4,518			11,156			14,382
Loss from operations		(6,015	)		(4,518	)		(11,156	)		(14,085	)
Interest and other income, net		107			111			257			162
Net loss from continuing operations		(5,908	)		(4,407	)		(10,899	)		(13,923	)
Discontinued operations:
Gain (loss) from discontinued operations		13,474			(6,089	)		7,330			(22,939	)
Net gain (loss)	$	7,566		$	(10,496	)	$	(3,569	)	$	(36,862	)
Net gain (loss) per share - basic:
Net loss per share from continuing operations - basic	$	(2.43	)	$	(2.03	)	$	(4.74	)	$	(6.41	)
Net gain (loss) per share from discontinued operations - basic		5.53			(2.80	)		3.19			(10.56	)
Basic net gain (loss) per share (*)	$	3.11		$	(4.83	)	$	(1.55	)	$	(16.96	)
Net gain (loss) per share - diluted:
Net loss per share from continuing operations - diluted	$	(2.12	)	$	(2.03	)	$	(4.74	)	$	(6.41	)
Net gain (loss) per share from discontinued operations - diluted		4.84			(2.80	)		3.19			(10.56	)
Diluted net gain (loss) per share (*)	$	2.72		$	(4.83	)	$	(1.55	)	$	(16.96	)
Weighted average shares used in calculating:
Basic shares		2,435			2,174			2,299			2,173
Diluted shares		2,786			2,174			2,299			2,173

Other comprehensive loss:
Net gain (loss)	$	7,566		$	(10,496	)	$	(3,569	)	$	(36,862	)
Other comprehensive loss:
Foreign currency translation adjustment loss (gain)		(2	)		(3	)		2			(5	)
Comprehensive gain (loss)	$	7,564		$	(10,499	)	$	(3,567	)	$	(36,867	)

*Adjusted retroactively for reverse stock split - see Note 1

The accompanying notes are an integral part of these condensed consolidated financial statements.

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands except share data)

(Unaudited)


	Common Stock				Paid-in		Accumulated			Accumulated other comprehensive			Total Stockholders’
	Shares		Amount		capital		deficit			loss			equity
Balance at December 31, 2021		2,170,509	$	—	$	263,345	$	(215,076	)	$	(23	)	$	48,246
Net loss		—		—		—		(12,978	)		—			(12,978	)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		1,909		—		—		—			—			—
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		1,476		—			—			1,476
Share‑based compensation expense related to issuance of stock options to non-employees						291								291
Foreign currency translation adjustment		—		—		—		—			(1	)		(1	)
Balance at March 31, 2022		2,172,418	$	—	$	265,112	$	(228,054	)	$	(24	)	$	37,034
Net loss		—		—		—		(13,388	)		—			(13,388	)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		1,574		—		17		—			—			17
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		1,410		—			—			1,410
Share‑based compensation expense related to issuance of stock options to non-employees						289								289
Foreign currency translation adjustment		—		—		—		—			(1	)		(1	)
Balance at June 30, 2022		2,173,992	$	—	$	266,828	$	(241,442	)	$	(25	)	$	25,361
Net loss		—		—		—		(10,496	)		—			(10,496	)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		717		—		—		—			—			—
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		1,372		—			—			1,372
Share‑based compensation expense related to issuance of stock options to non-employees						290								290
Foreign currency translation adjustment		—		—		—		—			(3	)		(3	)
Balance at September 30, 2022		2,174,709	$	—	$	268,490	$	(251,938	)	$	(28	)	$	16,524

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands except share data)

(Unaudited)


	Common Stock (*)					Preferred Stock				Paid-in		Accumulated			Accumulated other comprehensive			Total Stockholders’
	Shares			Amount		Shares		Amount		capital		deficit			loss			equity
Balance at December 31, 2022		2,175,936		$	—		—	$	—	$	269,626	$	(259,154	)	$	(20	)	$	10,452
Net loss		—			—		—		—		—		(6,954	)		—			(6,954	)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		309			—		—		—		—		—			—			—
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—			—		—		—		416		—			—			416
Share‑based compensation expense related to issuance of stock options to non-employees		—			—		—		—		10		—			—			10
Foreign currency translation adjustment		—			—		—		—		—		—			1			1
Balance at March 31, 2023		2,176,245		$	—		—	$	—	$	270,052	$	(266,108	)	$	(19	)	$	3,925
Net loss		—			—		—		—		—		(4,181	)		—			(4,181	)
Issuance of common stock		225,000			—		—		—		1,953		—			—			1,953
Issuance of preferred shares		—			—		351,037		—		3,047		—			—			3,047
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		6,618			—		—		—		24		—			—			24
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—			—		—		—		373		—			—			373
Share‑based compensation expense related to issuance of stock options to non-employees		—			—		—		—		6		—			—			6
Foreign currency translation adjustment		—			—		—		—		—		—			3			3
Fractional shares issuance		(67	)		—		—		—		—		—			—			—
Balance at June 30, 2023		2,407,796		$	—		351,037	$	—	$	275,455	$	(270,289	)	$	(16	)	$	5,150
Net gain		—			—		—		—		—		7,566			—			7,566
Issuance of common stock upon vesting of RSUs		37,300			—		—		—		—		—			—			—
Share-based compensation expense related to issuance of stock options and RSUs to employees		—			—		—		—		154		—			—			154
Share‑based compensation expense related to issuance of stock options to non-employees		—			—		—		—		5		—			—			5
Foreign currency translation adjustment		—			—		—		—		—		—			(2	)		(2	)
Balance at September 30, 2023		2,445,096		$	—		351,037	$	—	$	275,614	$	(262,723	)	$	(18	)	$	12,873

*Adjusted retroactively for reverse stock split - see Note 1

The accompanying notes are an integral part of these condensed consolidated financial statements.

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Nine Months Ended September 30,