Cyclerion Announces Corporate Updates and Q1 2023 Financial Results

Definitive agreement reached with new company (“NewCo”) established by certain Cyclerion shareholders and new investors

Cyclerion to receive $8M in cash and 10% equity in NewCo in exchange for its zagociguat and CY3018 assets

Definitive agreement signing triggers previously announced $5M equity investment in Cyclerion

Cyclerion CEO Peter Hecht Ph.D. to lead NewCo while continuing to serve on the Cyclerion board as one of the company’s largest shareholders

Biopharma executive Errol De Souza Ph.D. elected as chair of the Cyclerion board

CAMBRIDGE, Mass., May 11, 2023 (GLOBE NEWSWIRE) -- 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.