CYCN Cyclerion Therapeutics Inc

 

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 June 30, 2023

or

 

	☐	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 July 24, 2023, the registrant had 2,410,796 shares of common stock, no par value, outstanding.

 

---

 

CYCLERION PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

 

		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for Three and Six Months Ended June 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity for Three and Six Months Ended June 30, 2023 and 2022	7
	Condensed Consolidated Statements of Cash Flows for Six Months Ended June 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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	Signatures	30

 

 

 

 

---

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. All statements in this report, other than statements of historical facts, including statements about future events, financing plans, financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations, are forward-looking statements that involve certain risks and uncertainties. Use of the words “may,” “might,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal” or the negative of those words or other similar expressions may identify forward-looking statements that represent our current judgment about possible future events, but the absence of these words does not necessarily mean that a statement is not forward-looking.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market and regulatory conditions and the following:

 

3

---

 

See the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and elsewhere in this Quarterly Report on Form 10-Q for a further description of these and other factors. We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

4

---

 

Cyclerion Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share data)

(Unaudited)

 

		June 30, 2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	5,641			$	13,382
Accounts receivable			—				96
Prepaid expenses			1,044				805
Other current assets			428				537
Total current assets			7,113				14,820
Operating lease right-of-use asset			1,125				1,218
Other assets			1,859				2,041
Total assets		$	10,097			$	18,079
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,864			$	2,970
Accrued research and development costs			620				2,275
Accrued expenses and other current liabilities			2,463				2,382
Total current liabilities			4,947				7,627
Commitments and contingencies (Note 6)			—				—
Stockholders' equity
Preferred shares, no par value, 500,000 shares authorized and 351,037 series A convertible preferred stock issued and outstanding at June 30, 2023			—				—
Common stock, no par value, 20,000,000 shares authorized and 2,407,796 issued and outstanding at June 30, 2023 and 20,000,000 shares authorized and 2,175,936 issued and outstanding at December 31, 2022 (*)			—				—
Paid-in capital			275,455				269,626
Accumulated deficit			(270,289	)			(259,154	)
Accumulated other comprehensive loss			(16	)			(20	)
Total stockholders' equity			5,150				10,452
Total liabilities and stockholders' equity		$	10,097			$	18,079

 

*Adjusted retroactively for reverse stock split - see Note 1

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

 

5

---

 

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands except per share data)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
Revenues:
Revenue from development agreement			—				72				—				297
Revenue from grants			—				234				—				720
Total revenues			—				306				—				1,017
Cost and expenses:
Research and development			886				10,218				4,659				19,961
General and administrative			3,357				3,521				6,626				7,473
Total cost and expenses			4,243				13,739				11,285				27,434
Loss from operations			(4,243	)			(13,433	)			(11,285	)			(26,417	)
Interest and other income, net			62				45				150				51
Net loss		$	(4,181	)		$	(13,388	)		$	(11,135	)		$	(26,366	)
Net loss per share:
Basic and diluted net loss per share (*)		$	(1.83	)		$	(6.16	)		$	(5.00	)		$	(12.14	)
Weighted average shares used in calculating:
Basic and diluted net loss per share			2,282				2,173				2,229				2,172
Other comprehensive loss:
Net loss		$	(4,181	)		$	(13,388	)		$	(11,135	)		$	(26,366	)
Other comprehensive loss:
Foreign currency translation adjustment loss			3				(1	)			4				(2	)
Comprehensive loss		$	(4,178	)		$	(13,389	)		$	(11,131	)		$	(26,368	)

 

*Adjusted retroactively for reverse stock split - see Note 1

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

 

6

---

 

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands except share data)

(Unaudited)

		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

 

 

7

---

 

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

 

*Adjusted retroactively for reverse stock split - see Note 1

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

 

8

---

 

Cyclerion Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

		Six Months Ended June 30,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(11,135	)		$	(26,366	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization			—				65
Share-based compensation expense			805				3,466
Changes in operating assets and liabilities:
Accounts receivable			96				(127	)
Related party accounts receivable			—				—
Prepaid expenses			(239	)			281
Other current assets			109				(14	)
Operating lease assets			93				92
Other assets			182				183
Accounts payable			(1,106	)			939
Accrued research and development costs			(1,655	)			(1,594	)
Accrued expenses and other current liabilities			81				(578	)
Net cash (used in) operating activities			(12,769	)			(23,653	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock purchase agreement			5,000				—
Proceeds from exercises of stock options and ESPP			24				17
Net cash provided by financing activities			5,024				17
Effect of exchange rate changes on cash and cash equivalents			4				(2	)
Net decrease in cash, cash equivalents and restricted cash			(7,741	)			(23,638	)
Cash, cash equivalents and restricted cash, beginning of period			13,382				53,961
Cash, cash equivalents and restricted cash, end of period		$	5,641			$	30,323