Cyclerion Therapeutics, Inc. (Nasdaq: CYCN) today announced
corporate updates and first quarter 2023 financial results.
Definitive Agreement Signed
On May 11, 2023 Cyclerion entered into a
definitive agreement to sell two of its sGC* stimulator assets,
zagociguat (formerly CY6463) and CY3018, to a new private company
(“NewCo”) formed by certain current Cyclerion shareholders and new
investors who have agreed to invest $81M to advance these assets.
Under the terms of the agreement, Cyclerion will receive an $8M
cash payment at closing, reimbursement for all expenses related to
zagociguat and CY3018 for the period between signing and closing of
the transaction, and 10% equity ownership in NewCo that is subject
to anti-dilution protection through $100M in post-money valuation.
Cyclerion will also have additional future equity purchase rights
in NewCo. The transaction is subject to approval by Cyclerion
shareholders and, once completed, will enable the assets to be
developed in NewCo with the capital and capabilities to advance
them while giving Cyclerion shareholders the opportunity to
participate in future value creation without having the obligation
to make direct investments and take on the risk of these
early-stage programs.
Go Forward Strategy
Previously, Cyclerion out-licensed the
peripherally active sGC stimulator praliciguat to Akebia
Therapeutics, Inc. (“Akebia”), a leading biopharmaceutical company
focused on kidney disease. Under the terms of that agreement, the
Company is eligible to receive up to $585M in development,
regulatory, and commercialization milestones, as well as
sales-based royalties. Cyclerion retains full rights to olinciguat,
an oral, once-daily, peripheral sGC stimulator, that has shown a
favorable safety and tolerability profile, drug characteristics,
and dose-dependent pharmacological activity in several placebo
controlled clinical studies. Olinciguat has a strong patent estate
with intellectual property exclusivity to the late 2030s. sGC
stimulators are now approved for PAH** and HFrEF*** (both
multibillion dollar opportunities). In similar fashion to today’s
transaction and the Akebia license, Cyclerion intends to identify a
partner with deep cardiovascular experience to maximize
olinciguat’s value while minimizing distraction and operating
expense.
These external development deals make up a
growing diverse portfolio of upside value for our shareholders and
the potential for non-dilutive funds from upfront and milestone
payments and/or monetization of equity positions and royalties. The
externalization of the initial sGC assets means that Cyclerion now
has the opportunity to bring in new assets to develop using its
highly efficient and externalized model. The Company will initially
target assets in the CNS therapeutic area that are at a later stage
of development and can be advanced to approval more quickly.
Upon approval of the current transaction by
Cyclerion shareholders, Peter Hecht will transition out of his
Cyclerion CEO role and join NewCo as its CEO. Dr. Hecht, a major
Cyclerion shareholder, will continue to serve as a Cyclerion
Director. Cyclerion has initiated a search to bring in a new leader
to drive the company’s strategy going forward.
Board of Directors
Current independent board member Errol De Souza
has been elected to serve as the chair of the Cyclerion Board
effective immediately. Dr. De Souza is a seasoned R&D and
business leader with broad experience - from large pharma to start
ups - in the discovery and development of therapeutics for the
treatment of CNS disorders.
“I am excited to have a unique platform from
which to exercise my passion for finding underappreciated and
undervalued neuro assets. I’ve been fortunate to have had multiple
successful opportunities to uncover important neuro therapies
through approval that are having profound impacts on patients’
lives, and I’ve done so in a variety of circumstances, including
small biotechs” said Errol De Souza, Chair of the Cyclerion Board
of Directors. “I am looking forward to the opportunity to take
learnings from each of those and apply them to Cyclerion alongside
a group of supportive, long-term, core investors.”
ADv Study Results
Cyclerion recently completed the analysis of its
signal-seeking clinical study of zagociguat for the potential
treatment of Alzheimer’s disease with vascular pathology (ADv)
(NCT04798989). This exploratory, randomized, placebo-controlled,
study of oral once-daily zagociguat was designed to evaluate
safety, tolerability, and pharmacokinetics as well as explore the
impact on biomarkers and cognitive performance over a twelve-week
dosing period. The total number of participants in the study was
capped at 12 participants due to challenges associated with
enrollment. Data from this study show that the safety and
tolerability profile of once-daily zagociguat was consistent with
prior studies. Given the small number of participants Cyclerion is
unable to draw any conclusions from the data generated in the
study.
Equity Investment
Signing of the definitive agreement today
triggered the previously announced $5M equity investment by CEO
Peter Hecht. This investment will take place on May 19, 2023 and
Hecht will receive a mix of common stock and nonvoting convertible
preferred stock of Cyclerion at a minimum purchase price of $0.434
per share, subject to adjustment for any reverse stock split or
similar event. The proceeds from this investment and the $8M
upfront from the sale of zagociguat and CY3018 are expected to
support ongoing operations for at least 12 months post-closing of
the transaction.
Financial Position
- Cash, cash equivalents, and
restricted cash balance on March 31, 2023 was approximately $7.2
million, as compared to approximately $13.4 million on December 31,
2022.
- Research and development expenses
were approximately $3.8 million for Q1 2023, as compared to
approximately $9.7 million for Q1 2022. The decrease of
approximately $6.0 million was primarily driven by decreases of
$3.1 million in external research and development costs related to
zagociguat and CY3018, $1.6 million in employee-related expenses,
$0.6 million in non-cash stock-based compensation, and $0.6 million
in professional services.
- General and administrative expenses
were approximately $3.3 million for Q1 2023, as compared to
approximately $4.0 million for Q1 2022. The decrease of
approximately $0.7 million was primarily driven by a decrease in
non-cash stock-based compensation.
- Net Loss: Net loss was
approximately $7.0 million for Q1 2023, as compared to
approximately $13.0 million for Q1 2022.
About Cyclerion
TherapeuticsCyclerion Therapeutics is a
clinical-stage biopharmaceutical company on a mission to develop
treatments for serious diseases. Cyclerion’s portfolio includes
novel sGC stimulators that modulate a key node in a fundamental
signaling network in both the CNS and the periphery. The
multidimensional pharmacology elicited by the stimulation of sGC
has the potential to impact a broad range of diseases. Zagociguat
is a CNS-penetrant sGC stimulator that has shown rapid improvements
across a range of endpoints reflecting multiple domains of disease
activity, including mitochondrial disease-associated biomarkers.
CY3018 is a CNS-targeted sGC stimulator in preclinical development
that preferentially localizes to the brain and has a pharmacology
profile that suggests its potential for the treatment of
neuropsychiatric diseases and disorders. Praliciguat is a systemic
sGC stimulator that is licensed to Akebia and being advanced in
rare kidney disease. Olinciguat is a vascular sGC stimulator that
the Company intends to out-license for cardiovascular diseases. For
more information about Cyclerion, please
visit https://www.cyclerion.com/ and follow us on Twitter
(@Cyclerion) and LinkedIn (www.linkedin.com/company/cyclerion).
Forward Looking
StatementCertain matters discussed in this press release
are “forward-looking statements”. We may, in some cases, use terms
such as “predicts,” “believes,” “potential,” “continue,”
“estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,”
“could,” “might,” “will,” “should”, “positive” or other words that
convey uncertainty of future events or outcomes to identify these
forward-looking statements. In particular, the Company’s statements
regarding the assessment of the best combination of capital,
capabilities, and transactions available to it resulting in the
Company pursuing a transaction or that any transaction, if pursued,
will be completed on attractive terms, the success of any such
potential transactions in delivering any future value to the
Company, the sufficiency of any expected revenues to provide
liquidity and capital resources to pursue any of our go-forward
business plans regarding any product candidate, the potential for
zagociguat in the treatment of mitochondrial diseases, the
potential for CY3018 in the treatment of CNS diseases, the
potential for olinciguat in the treatment of cardiovascular and
cardiopulmonary diseases, the potential for any successful
development of any of our assets, and other trends and potential
future results are examples of such forward-looking statements. The
forward-looking statements include risks and uncertainties,
including, but not limited to, the success of any transactions in
delivering any future value to the company, our ability to succeed
with any go-forward business, the sufficiency of any expected
proceeds to provide liquidity and capital resources to pursue any
of our go-forward business plans regarding any product candidate
(including without limitation our ability to fund additional
clinical trials); any ability to successfully demonstrate the
efficacy, safety and therapeutic effectiveness of any product
candidate; any results of clinical studies not necessarily being
indicative of or supported by the final results of subsequent
clinical trials; the timing of and ability to pursue, obtain and
maintain U.S. Food and Drug Administration (“FDA”) or other
regulatory authority approval of, or other action with respect to,
product candidates; the Company’s ability to successfully defend
its intellectual property or obtain necessary licenses at a cost
acceptable to the Company, if at all; the successful implementation
of the Company’s research and development programs and
collaborations; the success of the Company’s license agreements;
the acceptance by the market of the product candidates, if
approved; and other factors, including general economic conditions
and regulatory developments, not within the Company’s control. The
factors discussed herein could cause actual results and
developments to be materially different from those expressed in or
implied by such statements. The forward-looking statements are made
only as of the date of this press release and the Company
undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstance.
* sGC (Soluble guanylate cyclase)
** PAH (Pulmonary arterial hypertension)
*** HFrEF (Heart failure with reduced ejection
fraction)
Investors and Media
Inquiries
Cyclerion Investor RelationsPhone:
857-327-8778Email: IR@cyclerion.com
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