Cyclerion(CYCN) - 2024 Q4 - Annual Report

Part I Business Cyclerion Therapeutics has pivoted to developing neuropsychiatric disease therapeutics, monetizing legacy assets to fund its new strategy Overview and Strategy The company is building a new pipeline for neuropsychiatric diseases, focusing on an individualized therapy for treatment-resistant depression (TRD) - Cyclerion's new strategy is to build a pipeline for neuropsychiatric diseases, starting with a foundational product candidate for treatment-resistant depression (TRD)[23] - The company has entered into a non-binding option to license agreement for the intellectual property associated with the TRD product candidate[23] - To support its new strategy, the company filed a Form S-3 Shelf Registration, which was declared effective in February 2025, to allow for the sale of common stock[24] - The company operates with a lean structure, with only one full-time employee (CEO Dr. Regina Graul) as of year-end, utilizing consultants for other key roles like CFO[25] Legacy sGC Portfolio and Monetization The company is monetizing its legacy sGC stimulator portfolio through asset sales and licensing agreements to generate revenue - The company's CNS assets, zagociguat and CY3018, were sold to Tisento Therapeutics in July 2023 for $8.0 million in cash, expense reimbursements, and a 10% equity stake in Tisento's parent company[34] - The praliciguat license agreement with Akebia was amended in December 2024, providing Cyclerion with $1.75 million in payments and eligibility for up to $558.5 million in future milestones plus tiered royalties[30][31] - In July 2024, Cyclerion entered into an exclusive non-binding option agreement for its vascular sGC stimulator, olinciguat, with a third party for an initial fee of $150,000[33] Intellectual Property The company protects its technology through a portfolio of U.S. and foreign patents, trade secrets, and proprietary know-how - The company holds 20 issued U.S. patents and 11 pending U.S. patent applications for its sGC programs[40] - The praliciguat patent portfolio includes 13 issued U.S. patents, with the key composition of matter patent expiring in 2034 and other patents extending to 2039[42][43][44] - The olinciguat patent portfolio includes 14 issued U.S. patents, with the key composition of matter patent expiring in 2034 and other patents extending as far as 2042[47][48][49] Government Regulation The company's products are subject to extensive regulation by the FDA and similar foreign authorities, requiring a lengthy and expensive approval process - The FDA drug approval process involves extensive nonclinical studies, submission of an IND, and performance of adequate and well-controlled human clinical trials (Phase 1, 2, and 3) before an NDA can be submitted[55][58][62] - The FDA has programs to expedite development and review, including Fast Track designation, Breakthrough Therapy designation, and Priority Review, for drugs treating serious conditions with unmet medical needs[67][68][69] - Post-approval, the company is subject to continuous FDA regulation, including requirements for recordkeeping, reporting of adverse events, and compliance with current Good Manufacturing Practices (GMP)[75][77] Competition The company anticipates significant competition for its potential TRD product from major pharmaceutical companies and other biotechs - The company will face competition from major pharmaceutical, biopharmaceutical, and biotechnology companies, as well as academic and research organizations[86] - Current treatments for TRD fall into three main categories: pharmacotherapies (antidepressants, antipsychotics), somatic therapies (ECT, rTMS), and psychotherapeutic approaches[87][88] - Only two pharmacotherapies are specifically approved for TRD in the U.S: Spravato (esketamine) and Symbyax (olanzapine/fluoxetine)[88] Manufacturing, Human Capital, and Corporate Information Cyclerion outsources all manufacturing, operates with minimal staff, and trades on the Nasdaq Capital Market under the symbol "CYCN" - The company outsources all manufacturing activities to third-party CMOs and has no plans to establish its own facilities[92] - As of December 31, 2024, the company had one employee and utilized several consultants, including its Chief Financial Officer[94] Risk Factors The company faces substantial financial, developmental, and operational risks, including a "going concern" warning and heavy reliance on third parties Risks Related to Financial Position and Capital Needs The company has a history of losses and insufficient cash to fund operations beyond mid-2025, raising substantial doubt about its viability - There is substantial doubt regarding the company's ability to continue as a going concern[99][111] - As of December 31, 2024, the company had $3.2 million in cash and cash equivalents, which is not sufficient to fund operations beyond the second quarter of 2025[111] - The company has a history of significant losses, with net losses of $3.1 million in 2024 and $5.3 million in 2023, and may never achieve profitability[108] Risks Related to Development and Clinical Testing The company's success depends on the inherently risky and lengthy process of clinical development and regulatory approval for its product candidates - Research and development of biopharmaceutical products is inherently risky, and the company may fail to demonstrate the safety and efficacy of its product candidates to the satisfaction of regulatory authorities[117] - The company could face difficulties in enrolling participants in clinical studies, which could delay or prevent the progress of its product candidates[119] - The regulatory approval process is lengthy, time-consuming, and unpredictable, and it is possible that none of the company's product candidates will ever obtain regulatory approval[121] Risks Related to Reliance on Licensees, Tisento and Third Parties The company's financial prospects are highly dependent on the performance of its partners and its reliance on third-party service providers - The company's investment in Tisento is risky, as Tisento is an early-stage company and Cyclerion has no operational control, meaning the equity value could be diluted or lost entirely[134][135] - Future revenue from the Akebia license for praliciguat is uncertain, as Akebia may not be successful and can terminate the agreement with 180 days' notice[133] - The company expects to continue relying on third-party CROs to conduct clinical studies and CMOs to manufacture drug supplies, and if these parties do not perform successfully, development could be delayed or harmed[100][137][142] Risks Related to Intellectual Property The company's success depends on its ability to obtain, maintain, and defend its patent portfolio against challenges and potential infringement claims - The company may be unable to obtain and maintain issued patents sufficient to protect its product candidates, which could allow competitors to more directly compete[145] - The company may infringe on the intellectual property rights of others, which could prevent or delay development efforts and lead to costly litigation or royalty payments[159][161] - Changes in U.S. patent law, such as the America Invents Act, have created uncertainty and could weaken the company's ability to obtain and enforce patents[172] Risks Related to Commercialization The company faces significant commercialization hurdles, including market acceptance, pricing, reimbursement, and competition from well-resourced rivals - The market opportunities for product candidates may be smaller than estimated, which would harm revenue and profitability[177] - Even if approved, product candidates may not achieve broad market acceptance, and securing adequate reimbursement may be difficult[180][182] - The company faces significant competition from companies with greater financial resources, and competitors may develop safer, more effective, or less expensive therapies[189][191] Risks Related to Business Operations Operational risks include high dependency on its sole employee, potential product liability, cybersecurity threats, and maintaining internal controls - The company is highly dependent on its President and CEO, Regina Graul, who is currently its sole employee[200] - The company faces significant risk from cybersecurity threats, which could compromise sensitive data, leading to regulatory action, litigation, and operational interruptions[212][213][218] - The use of product candidates in clinical studies exposes the company to product liability claims, which could result in substantial liabilities and damage its reputation[203] Risks Related to Ownership of Common Stock Ownership of the company's common stock involves risks of Nasdaq delisting, high price volatility, and potential classification as an investment company - The company could be delisted from Nasdaq if it fails to maintain the minimum $1.00 bid price requirement in the future; it previously regained compliance via a 20:1 reverse stock split in May 2023[226][228] - The market price of the common stock is highly volatile and may fluctuate widely due to numerous factors, including clinical trial results and financing efforts[231][233] - The company runs the risk of being deemed an investment company under the Investment Company Act of 1940, which would severely restrict its operations[234] Unresolved Staff Comments The company reports that it has no unresolved staff comments - None[248] Cybersecurity The company manages cybersecurity risks through internal processes and third-party vendors, with oversight from the Board's Audit Committee Risk Management and Strategy The company employs monitoring tools, threat assessments, and mitigation plans to manage cybersecurity risks integrated into its enterprise risk management - The company uses automated tools for monitoring, threat detection, and intrusion prevention to manage cybersecurity risks[250] - Mitigation strategies include incident response plans, disaster recovery plans, encryption, access controls, and employee training[251] - A vendor management program is in place to oversee and manage cybersecurity risks associated with third-party providers like CROs and CMOs[254] Governance The Board of Directors, through its Audit Committee, oversees cybersecurity risk management, which is implemented by management and IT consultants - The Board of Directors provides general oversight of cybersecurity risk, with the Audit Committee specifically overseeing the risk management program starting in 2024[256] - Management and IT consultants are responsible for the day-to-day implementation and maintenance of the cybersecurity program[257] - The Board receives regular reports from management regarding the cybersecurity risk management program, threats, and mitigation efforts[260] Properties The company operates with a virtual model, leasing office space as needed and outsourcing all laboratory work - The company currently leases office space on an "as-needed" basis and outsources all research and development laboratory work[261] Legal Proceedings The company is not currently a party to any material legal proceedings - As of the report date, the company is not a party to any material legal proceedings[262] Mine Safety Disclosures This item is not applicable to the company - Not applicable[263] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Capital Market, and it does not anticipate paying dividends in the foreseeable future - The company's common stock trades on the Nasdaq Capital Market under the symbol "CYCN"[266] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[267] Selected Financial Data As a smaller reporting company, Cyclerion is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[270] Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss improved in FY2024 due to new licensing revenue and reduced expenses, but a "going concern" warning remains Results of Operations For FY2024, the company generated $2.0 million in revenue and significantly reduced its operating loss to $3.6 million from $13.0 million in FY2023 Consolidated Statements of Operations Summary | | Year Ended December 31, | | Change | | | :--- | :--- | :--- | :--- | :--- | | (dollars in thousands) | 2024 | 2023 | $ | % | | Total revenues | $2,000 | $— | $2,000 | 100% | | Research and development | 286 | 1,515 | (1,229) | (81)% | | General and administrative | 5,342 | 8,132 | (2,790) | (34)% | | Impairment loss | — | 3,304 | (3,304) | (100)% | | Total cost and expenses | 5,628 | 12,951 | (7,323) | (57)% | | Loss from operations | (3,628) | (12,951) | 9,323 | (72)% | | Net loss from continuing operations | (3,057) | (12,593) | 9,536 | (76)% | | Gain from discontinued operations | — | 7,330 | (7,330) | (100)% | | Net loss | $(3,057) | $(5,263) | $2,206 | (42)% | - Revenue of $2.0 million in 2024 was generated from the amended Akebia license agreement ($1.75M) and the olinciguat option agreement ($0.25M)[294] - The $1.2 million decrease in R&D expenses was driven by reduced employee-related costs, IT services, and research study costs following the 2023 asset sale and workforce reduction[295] - The $2.8 million decrease in G&A expenses was primarily due to savings in legal services ($1.5M), reduced employee costs, and lower audit, insurance, and IT expenses[296] Liquidity and Capital Resources With only $3.2 million in cash, management has substantial doubt about the company's ability to continue as a going concern beyond mid-2025 - The company had $3.2 million in unrestricted cash and cash equivalents as of December 31, 2024[306] - Management concluded that substantial doubt exists about the company's ability to continue as a going concern, as current cash is only sufficient to fund operations through mid-2025[309][405] - A new Shelf Registration on Form S-3 was filed in February 2025 for up to $25.0 million, but the amount sellable is restricted to one-third of the public float[302] Cash Flow Summary | | Year Ended December 31, | | Change | | | :--- | :--- | :--- | :--- | :--- | | (dollars in thousands) | 2024 | 2023 | $ | % | | Net cash used in operating activities | $(4,333) | $(21,245) | $16,912 | (80)% | | Net cash provided by investing activities | $— | $10,402 | $(10,402) | (100)% | | Net cash provided by financing activities | $— | $5,024 | $(5,024) | (100)% | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cyclerion is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[326] Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements, notes, and the independent auditor's report with a "going concern" paragraph Report of Independent Registered Public Accounting Firm The auditor's report expresses an unqualified opinion but includes a paragraph highlighting substantial doubt about the company's ability to continue as a going concern - The auditor's report contains a "Going Concern" paragraph, highlighting substantial doubt about the company's ability to continue as a going concern[369] Consolidated Financial Statements The financial statements show a decrease in total assets to $9.6 million and an improved net loss of $3.1 million for 2024 Key Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,232 | $7,571 | | Total current assets | $4,225 | $8,024 | | Total assets | $9,575 | $13,374 | | Total current liabilities | $725 | $2,086 | | Total stockholders' equity | $8,850 | $11,288 | Key Operations Data (in thousands, except per share) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Total revenues | $2,000 | $— | | Loss from operations | $(3,628) | $(12,951) | | Net loss | $(3,057) | $(5,263) | | Net loss per share | $(1.21) | $(2.25) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None[328] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2024 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[331] - Management concluded that the company's internal controls over financial reporting were effective as of December 31, 2024[334] - The annual report does not include an attestation report from the independent registered public accounting firm regarding internal control over financial reporting, as permitted by SEC rules[336] Other Information The company reports no other information for this item - None[340] Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - Not applicable[341] Part III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's 2025 Proxy Statement - Information for this item is incorporated by reference from the company's 2025 Proxy Statement[344][345] Executive Compensation Information for this item is incorporated by reference from the company's 2025 Proxy Statement - Information for this item is incorporated by reference from the company's 2025 Proxy Statement[344][346] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's 2025 Proxy Statement - Information for this item is incorporated by reference from the company's 2025 Proxy Statement[344][347] Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's 2025 Proxy Statement - Information for this item is incorporated by reference from the company's 2025 Proxy Statement[344][348] Principal Accounting Fees and Services Information for this item is incorporated by reference from the company's 2025 Proxy Statement - Information for this item is incorporated by reference from the company's 2025 Proxy Statement[344][349] Part IV Exhibits, Financial Statement Schedules This section contains an index to the financial statements and a list of all exhibits filed with the Form 10-K - This item provides an index to the financial statements and a list of exhibits filed with the report[352][354] Form 10-K Summary This item is not applicable to the company - Not applicable[358]