Cyclerion(US:CYCN)2024-11-14 21:30PART I — FINANCIAL INFORMATION Financial Statements (unaudited) This section presents Cyclerion Therapeutics' unaudited condensed consolidated financial statements, including a going concern disclosure Condensed Consolidated Balance Sheets Total assets decreased to $8.9 million from $13.4 million, driven by reduced cash and cash equivalents, while equity declined to $8.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Items | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,872 | $7,571 | | Total current assets | $3,548 | $8,024 | | Other investment | $5,350 | $5,350 | | Total assets | $8,898 | $13,374 | | Liabilities & Equity | | | | Total current liabilities | $700 | $2,086 | | Total stockholders' equity | $8,198 | $11,288 | | Total liabilities and stockholders' equity | $8,898 | $13,374 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss remained $3.6 million for the nine months ended September 30, 2024, with improved loss from continuing operations due to new revenue and lower expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Total revenues | $194 | $0 | | Research and development | $230 | $1,491 | | General and administrative | $4,094 | $6,361 | | Loss from operations | $(4,130) | $(11,156) | | Net loss from continuing operations | $(3,587) | $(10,899) | | Gain from discontinued operations | $0 | $7,330 | | Net loss | $(3,587) | $(3,569) | | Basic net loss per share | $(1.43) | $(1.55) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $11.3 million to $8.2 million, primarily due to a $3.6 million net loss partially offset by share-based compensation Changes in Stockholders' Equity (in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2023 | $11,288 | | Net loss | $(3,587) | | Share-based compensation expense | $503 | | Other adjustments | $(12) | | Balance at September 30, 2024 | $8,198 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased to $4.7 million in 2024, with no investing or financing activities, leading to a $4.7 million cash balance decrease Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,693) | $(19,704) | | Net cash provided by investing activities | $0 | $10,402 | | Net cash provided by financing activities | $0 | $5,024 | | Net decrease in cash | $(4,699) | $(4,274) | | Cash at end of period | $2,872 | $9,108 | Notes to the Condensed Consolidated Financial Statements Notes detail the company's strategic shift to new CNS assets, the sale of prior programs, current out-licensed assets, and a going concern conclusion - The company shifted its strategy to identify and acquire or license new non-sGC stimulator assets within the CNS therapeutic area to build a new portfolio26 - On July 28, 2023, the company sold its zagociguat and CY3018 programs to Tisento Therapeutics, Inc. for cash and a 10% equity stake, now presented as discontinued operations2447 - In July 2024, the company entered an Option to License Agreement for its olinciguat asset, receiving an initial option fee of $150,000 and generating $0.2 million in revenue for the quarter83 - Management concluded that substantial doubt exists about the Company's ability to continue as a going concern, as current cash is expected to fund operations only through mid-2025, requiring additional funding3839 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and strategic shift to new CNS assets, noting reduced operating expenses but substantial doubt about going concern - The company shifted its strategy to identify non-sGC stimulator assets, mainly within the CNS therapeutic area, to build a new portfolio after selling its primary assets to Tisento in 202398 - The company's retained assets include olinciguat, intended for out-licensing, and praliciguat, out-licensed to Akebia97100101 - Due to recurring losses and future funding needs, management concluded that substantial doubt exists about the company's ability to continue as a going concern132 Results of Operations Loss from operations improved to $4.1 million due to new revenue and significant reductions in R&D and G&A expenses from workforce reductions Comparison of Operations (in thousands) | Item | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $194 | $0 | 100% | | Research and development | $230 | $1,491 | (85%) | | General and administrative | $4,094 | $6,361 | (36%) | | Loss from operations | $(4,130) | $(11,156) | (63%) | - The decrease in R&D expense was driven by lower employee-related costs following the 2023 workforce reduction, and reduced spending on IT services, research studies, and lab-related costs117118 - The decrease in G&A expense was primarily due to lower employee-related costs, a $1.4 million reduction in legal services, and lower audit, insurance, and IT service fees119121 Liquidity and Capital Resources The company held $2.9 million in cash as of September 30, 2024, expected to fund operations only into mid-2025, raising substantial doubt about its going concern ability - The company had approximately $2.9 million in cash and cash equivalents as of September 30, 2024129 - Cash is expected to fund operations into mid-2025, but additional funding is required to sustain operations, raising substantial doubt about the company's ability to continue as a going concern132141 - Recent capital inflows include $5.0 million from a stock purchase in May 2023 and proceeds from the Tisento asset sale in July 2023126127 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cyclerion is not required to provide market risk disclosures under this item - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide information for this item150 Controls and Procedures Management, including CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report152 - No material changes in internal control over financial reporting occurred during the quarter153 PART II — OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings155 Risk Factors As a smaller reporting company, this section is not applicable, referring readers to the Annual Report on Form 10-K for risk factors - The company is a 'smaller reporting company' and is not required to provide risk factors in the 10-Q, referring instead to its most recent 10-K filing156 Other Information No director or Section 16 officer adopted or terminated Rule 10b5-1 trading plans or arrangements during the second quarter of 2024 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 plans or other trading arrangements during the second quarter of 2024157 Exhibits This section refers to the Exhibit Index, listing certifications and XBRL data files submitted with the quarterly report - This section refers to the Exhibit Index on the following page of the report158