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, 2022


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

For the transition period from to

Commission File Number 001-38787

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 Stock Market LLC (Nasdaq Global Select Market)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 1, 2022, the registrant had 43,494,184 shares of common stock, no par value, outstanding.

CYCLERION PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS


		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for Three and Nine Months Ended September 30, 2022 and 2021	6
	Condensed Consolidated Statements of Stockholders’ Equity for Three and Nine Months Ended September 30, 2022 and 2021	7
	Condensed Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2022 and 2021	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
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:

•

we could be delisted from Nasdaq;

•

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 our product candidates, including CY6463;

•

the coronavirus (“COVID-19”) pandemic and related constraints on supply chains and human resource availability affecting our clinical trials and other operating activities;

•

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;

•

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) will be achieved;

•

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

•

our plans with respect to the development, manufacture or sale of our 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 our product candidates;

•

the efficacy and perceived therapeutic benefits of our product candidates, their potential indications and their market potential;

•

U.S. and non-U.S. regulatory requirements for our product candidates, including any post-approval development and regulatory requirements, and the ability of our 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, real estate needs and concentration of voting control, as well as the timing and drivers thereof, and 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 our product candidates;

•

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

•

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, 2021, 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.

Cyclerion Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)

(Unaudited)


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	20,405		$	53,961
Accounts receivable		227			100
Prepaid expenses		536			928
Other current assets		488			468
Total current assets		21,656			55,457
Property and equipment, net		—			65
Operating lease right-of-use asset		1,264			1,402
Other assets		2,133			2,407
Total assets	$	25,053		$	59,331
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,645		$	1,828
Accrued research and development costs		4,316			6,353
Accrued expenses and other current liabilities		2,568			2,904
Total current liabilities		8,529			11,085
Commitments and contingencies (Note 6)		—			—
Stockholders' equity
Common stock, no par value, 400,000,000 shares authorized and 43,494,184 issued and outstanding at September 30, 2022 and 400,000,000 shares authorized and 43,410,185 issued and outstanding at December 31, 2021		—			—
Accumulated deficit		(251,938	)		(215,076	)
Paid-in capital		268,490			263,345
Accumulated other comprehensive loss		(28	)		(23	)
Total stockholders' equity		16,524			48,246
Total liabilities and stockholders' equity	$	25,053		$	59,331

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,
	2022			2021			2022			2021
Revenues:
Revenue from license agreement	$	—		$	—		$	—		$	3,000
Revenue from development agreement		—			77			297			138
Revenue from grants		—			271			720			271
Total revenues		—			348			1,017			3,409
Cost and expenses:
Research and development		7,082			7,032			27,043			27,178
General and administrative		3,525			4,601			10,998			16,207
Loss on lease termination		—			—			—			881
Total cost and expenses		10,607			11,633			38,041			44,266
Loss from operations		(10,607	)		(11,285	)		(37,024	)		(40,857	)
Interest and other income (expenses), net		111			(5	)		162			(15	)
Net loss	$	(10,496	)	$	(11,290	)	$	(36,862	)	$	(40,872	)
Net loss per share:
Basic and diluted net loss per share	$	(0.24	)	$	(0.26	)	$	(0.85	)	$	(1.08	)
Weighted average shares used in calculating:
Basic and diluted net loss per share		43,488			43,291			43,457			37,730

Other comprehensive loss:
Net loss	$	(10,496	)	$	(11,290	)	$	(36,862	)	$	(40,872	)
Other comprehensive loss:
Foreign currency translation adjustment (loss) gain		(3	)		—			(5	)		1
Comprehensive loss	$	(10,499	)	$	(11,290	)	$	(36,867	)	$	(40,871	)

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, 2020		34,047,300	$	—	$	222,949	$	(163,429	)	$	(27	)	$	59,493
Net loss		—		—		—		(13,399	)		—			(13,399	)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		82,625		—		27		—			—			27
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		1,921		—			—			1,921
Share-based compensation expense related to issuance of stock options and RSUs to non-employees		—		—		391		—			—			391
Balance at March 31, 2021		34,129,925	$	—	$	225,288	$	(176,828	)	$	(27	)	$	48,433
Net loss		—		—		—		(16,182	)		—			(16,182	)
Issuance of common stock - 2021 equity private placement and ATM		9,087,547				30,497								30,497
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		57,777		—		133		—			—			133
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		1,942		—			—			1,942
Share-based compensation expense related to issuance of stock options and RSUs to non-employees		—		—		398		—			—			398
Foreign currency translation adjustment		—		—		—		—			1			1
Balance at June 30, 2021		43,275,249	$	—	$	258,258	$	(193,010	)	$	(26	)	$	65,222
Net loss		—		—		—		(11,290	)		—			(11,290	)
Issuance of common stock - ATM		1,500		—		6		—			—			6
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan		33,340		—		37		—			—			37
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan		—		—		2,018		—			—			2,018
Share-based compensation expense related to issuance of stock options and RSUs to non-employees		—		—		394		—			—			394
Balance at September 30, 2021		43,310,089	$	—	$	260,713	$	(204,300	)	$	(26	)	$	56,387

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(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		43,410,185	$	—	$	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		38,175		—		—		—			—			—
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		43,448,360	$	—	$	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		31,475		—		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 and RSUs to non-employees		—		—		289		—			—			289
Foreign currency translation adjustment		—		—		—		—			(1	)		(1	)
Balance at June 30, 2022		43,479,835	$	—	$	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		14,349		—		—		—			—			—
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 and RSUs to non-employees		—		—		290		—			—			290
Foreign currency translation adjustment		—		—		—		—			(3	)		(3	)
Balance at September 30, 2022		43,494,184	$	—	$	268,490	$	(251,938	)	$	(28	)	$	16,524

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,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(36,862	)	$	(40,872	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization