Cyclerion(CYCN) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to significant risks and uncertainties, potentially causing actual results to differ materially from projections - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, potentially causing actual results to differ materially from expectations[10] - Substantial doubt exists regarding the company's ability to continue as a going concern, necessitating near-term capital raising to maintain operations[10] - Key risks include challenges in acquiring and developing new product candidates, obtaining regulatory approvals, maintaining Nasdaq listing, and uncertainties regarding the investment in Tisento Therapeutics Inc[10] PART I — Financial Information This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $9,370 | $9,575 | $(205) | (2.14)% | | Total Current Assets | $4,020 | $4,225 | $(205) | (4.85)% | | Cash and cash equivalents | $3,006 | $3,232 | $(226) | (6.99)% | | Total Current Liabilities | $800 | $725 | $75 | 10.34% | | Total Stockholders' Equity | $8,570 | $8,850 | $(280) | (3.16)% | | Accumulated Deficit | $(269,245) | $(267,492) | $(1,753) | 0.66% | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific reporting periods, including comprehensive loss Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total Revenues | $93 | $0 | $93 | 100% | $174 | $0 | $174 | 100% | | Total Cost and Expenses | $1,765 | $1,384 | $381 | 27.53% | $3,303 | $3,002 | $301 | 10.03% | | Loss from Operations | $(1,672) | $(1,384) | $(288) | 20.81% | $(3,129) | $(3,002) | $(127) | 4.23% | | Total Other Income, Net | $1,348 | $62 | $1,286 | 2074.19% | $1,376 | $138 | $1,238 | 897.10% | | Net Loss | $(324) | $(1,322) | $998 | (75.49)% | $(1,753) | $(2,864) | $1,111 | (38.79)% | | Basic and Diluted Net Loss per Share | $(0.11) | $(0.53) | $0.42 | (79.25)% | $(0.62) | $(1.14) | $0.52 | (45.61)% | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, reflecting net loss, stock issuances, and share-based compensation over time - Total stockholders' equity decreased from $8,850 thousand at December 31, 2024, to $8,570 thousand at June 30, 2025, primarily due to a net loss of $1,753 thousand, partially offset by $1,245 thousand from a private placement of common stock and $228 thousand in share-based compensation[20] - The company issued 499,998 shares of common stock through a private placement, contributing $1,245 thousand to paid-in capital during the six months ended June 30, 2025[20] Condensed Consolidated Statements of Cash Flows This section reports cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(1,471) | $(2,977) | $1,506 | (50.59)% | | Net cash provided by investing activities | $0 | $0 | $0 | 0% | | Net cash provided by financing activities | $1,245 | $0 | $1,245 | 100% | | Net decrease in cash and cash equivalents | $(226) | $(2,983) | $2,757 | (92.49)% | | Cash and cash equivalents, end of period | $3,006 | $4,588 | $(1,582) | (34.48)% | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1. Nature of Business This note describes Cyclerion's strategic shift to neuropsychiatric diseases, its foundational TRD product candidate, and financial outlook - Cyclerion is focused on building a new pipeline with therapeutics to treat certain neuropsychiatric diseases, prioritizing an individualized therapy for treatment resistant depression (TRD) as its foundational product candidate[26][83] - The company has discontinued its prior strategy of internal research and development on sGC stimulators, instead leveraging legacy sGC assets (Praliciguat, Olinciguat, Zagociguat/CY3018) to generate revenue[27] - In March 2025, the company completed a private placement of 499,998 common shares for approximately $1.375 million gross proceeds[34] - The company expects its cash and cash equivalents to fund operations into Q1 2026 but requires additional funding due to anticipated operating losses, raising substantial doubt about its ability to continue as a going concern[44][127] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and policies applied in preparing the condensed consolidated financial statements - The company's accounting policies are consistent with those outlined in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[46] - No new accounting pronouncements adopted during the six months ended June 30, 2025, had a material impact on the condensed consolidated financial statements[47] Note 3. Fair Value of Financial Instruments This note details the fair value measurements of financial instruments, primarily cash equivalents, and other short-term assets and liabilities Fair Value Measurements of Cash Equivalents (in thousands) | Cash Equivalents | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Money market funds (Level 1) | $2,856 | $3,025 | - The carrying amounts of accounts receivable, prepaid expenses, other current assets, accounts payable, and accrued expenses approximate their fair value due to their short-term nature[50] Note 4. Other Investment This note describes the company's investment in Tisento Parent, accounted for at cost less impairment, and its non-consolidation rationale - The company's investment in Tisento Parent is an equity security accounted for at cost less impairment, as it does not provide controlling financial interest or significant influence[53] - Despite Tisento Parent being identified as a Variable Interest Entity (VIE), Cyclerion does not consolidate it because it does not unilaterally control the activities that most significantly impact Tisento Parent's economic performance[52] Note 5. Property and Equipment This note provides details on the company's property and equipment, including gross amounts and accumulated depreciation Property and Equipment, Net (in thousands) | Property and Equipment | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Software, gross | $126 | $126 | | Less: accumulated depreciation | $(126) | $(126) | | Property and equipment, net | $0 | $0 | Note 6. Accrued Expenses and Other Current Liabilities This note details the composition of accrued expenses and other current liabilities, including professional fees and other obligations Accrued Expenses and Other Current Liabilities (in thousands) | Accrued Expenses | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Professional fees | $206 | $220 | | Other | $60 | $63 | | Total | $266 | $283 | Note 7. Commitments and Contingencies This note outlines the company's contractual commitments, indemnification obligations, and insurance recoveries related to material losses - The company enters into cancellable contracts for clinical and preclinical research, generally without significant cancellation penalties[56] - Indemnification obligations for officers, directors, and business partners are in the ordinary course of business, with no material costs incurred to date, resulting in minimal estimated fair value of these obligations[58] - The company recorded $1.3 million in insurance recoveries related to the loss of advanced intermediated GMP finished materials during the three and six months ended June 30, 2025[61] Note 8. Share-based Compensation Plans This note describes the company's share-based compensation plans and the associated expense recognized for stock options and restricted stock - Cyclerion's share-based compensation plans include the 2019 Employee Stock Purchase Plan, the 2019 Equity Incentive Plan (for stock options, RSAs, RSUs), and mirrored plans from Ironwood Pharmaceuticals[62][63] Share-based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $12 | $24 | $24 | $50 | | General and administrative | $102 | $160 | $204 | $315 | | Total | $114 | $184 | $228 | $365 | - As of June 30, 2025, unrecognized share-based compensation expense for unvested stock options is $0.2 million (expected recognition over 3.45 years) and for unvested RSAs is $0.3 million (expected recognition over 2.18 years)[66][70] Note 9. Loss per share This note presents the calculation of basic and diluted net loss per share, including the impact of anti-dilutive securities Net Loss Per Share (in thousands, except per share) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(324) | $(1,322) | $(1,753) | $(2,864) | | Weighted average shares outstanding | 3,071 | 2,510 | 2,842 | 2,502 | | Net loss per share (basic and diluted) | $(0.11) | $(0.53) | $(0.62) | $(1.14) | - Potential shares from Preferred Stock, stock options, and RSAs (totaling 799,800 at June 30, 2025) were excluded from diluted EPS calculations due to their anti-dilutive effect[71] Note 10. Option/License Agreement This note details the company's option and license agreements for olinciguat and praliciguat, including fees and potential milestone payments - The Option to License Agreement for olinciguat was extended in May 2025 for an additional three months with a $55,000 extension fee, leading to recognized revenue of $93,000 and $174,000 for the three and six months ended June 30, 2025, respectively[74] - Under the amended Akebia License Agreement for praliciguat, Cyclerion received $1.25 million in December 2024, is due $0.5 million by September 2025, and is eligible for up to $558.5 million in future development, regulatory, and commercialization milestone payments, plus tiered sales-based royalties (mid-single-digits to twenty percent)[77] - Akebia has assumed control and expenses for certain praliciguat patents earlier than originally agreed[77] Note 11. Subsequent Events This note discloses significant events occurring after the reporting period, such as common stock sales through an ATM program - Subsequent to June 30, 2025, the company sold 129,246 common shares through its At-the-Market (ATM) program, generating approximately $0.4 million in net proceeds by August 4, 2025[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition, discussing its strategic shift to neuropsychiatric diseases, particularly TRD, and efforts to leverage legacy sGC assets for revenue. It analyzes the results of operations, liquidity, capital resources, and the ongoing going concern uncertainty Overview This overview outlines Cyclerion's strategic focus on neuropsychiatric diseases, efforts to reduce expenses, and financing plans for its TRD product candidate - Cyclerion's core strategy is to develop therapeutics for neuropsychiatric diseases, with a foundational product candidate in individualized therapy for treatment-resistant depression (TRD)[83] - The company aims to significantly reduce operating expenses and generate revenue from legacy sGC stimulator assets while pursuing a financing strategy, including an S-3 Shelf Registration, to fund TRD product plans[84] - Regina Graul, Ph.D., was promoted to CEO in August 2024, and Rhonda Chicko was hired as CFO in 2024, with the company primarily using consultants to manage operating expenses[85] Financial Overview This section summarizes key financial developments, including reduced R&D expenses, amended license agreements, and updates on Tisento Therapeutics - Research and development expenses decreased significantly after July 28, 2023, due to the sale of Zagociguat and CY3018, leading to a reduction in R&D efforts[92] - The Akebia license agreement for Praliciguat was amended, providing for $1.75 million in amendment payments ($1.25 million received, $0.5 million due Sep 2025), up to $558.5 million in potential future milestones, and higher-tiered sales-based royalties[89] - The Option to License Agreement for Olinciguat was extended in May 2025 for an additional three months, with an extension fee of $55,000 received in June 2025[91] - Tisento Therapeutics, Inc., which acquired Zagociguat and CY3018, announced the first patient dosed in its global Phase 2b PRIZM study for MELAS in January 2025, and received FDA Fast Track designation for zagociguat in June 2025[93] Research and Development Expenses (in thousands) | R&D Expenses | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Personnel and related internal costs | $12 | $24 | $24 | $61 | | Others | $44 | $81 | $68 | $88 | | Total R&D expenses | $56 | $105 | $92 | $149 | Critical Accounting Policies and Estimates This section discusses the significant judgments and estimates involved in preparing financial statements, particularly regarding research and development expenses - The preparation of financial statements requires significant judgments and estimates, which are based on historical experience and reasonable assumptions[102] - All research and development expenses are expensed as incurred, while nonrefundable advance payments for R&D activities are deferred and capitalized until goods are received or services performed[104] Results of Operations This section analyzes the company's financial performance, detailing changes in revenue, expenses, and net loss for the reporting periods Results of Operations Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenue from option agreement | $93 | $0 | $93 | 100% | $174 | $0 | $174 | 100% | | Research and development | $56 | $105 | $(49) | (47)% | $92 | $149 | $(57) | (38)% | | General and administrative | $1,709 | $1,279 | $430 | 34% | $3,211 | $2,853 | $358 | 13% | | Interest income | $31 | $62 | $(31) | (50)% | $59 | $138 | $(79) | (57)% | | Gain from insurance recovery | $1,317 | $0 | $1,317 | 100% | $1,317 | $0 | $1,317 | 100% | | Net loss | $(324) | $(1,322) | $998 | (75)% | $(1,753) | $(2,864) | $1,111 | (39)% | - The increase in general and administrative expenses for the three and six months ended June 30, 2025, was primarily due to higher professional consulting and corporate legal fees, partially offset by reduced employee-related expenses[109][110] - Interest income decreased due to a lower money market fund balance[111] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations, discussing cash position, financing activities, and future funding needs - In March 2025, the company completed a private placement, raising approximately $1.375 million in gross proceeds from the sale of 499,998 common shares[113] - An 'at the market' (ATM) equity offering program was established in May 2025, allowing the sale of up to $20 million in common stock, with $0.4 million in net proceeds generated from July 1 to August 4, 2025[115][120] - As of June 30, 2025, the company had $3.0 million in unrestricted cash and cash equivalents, expected to fund operations into the first quarter of 2026[125][127] - Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and the need for additional funding to sustain operations beyond Q1 2026[127] Cash Flows Summary (in thousands) | Cash Flows | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(1,471) | $(2,977) | $1,506 | (51)% | | Net cash provided by financing activities | $1,245 | $0 | $1,245 | 100% | - Future funding requirements are highly uncertain and depend on the scope, progress, and costs of product candidate development, regulatory review, commercialization, intellectual property, and market conditions[135][142] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cyclerion Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Cyclerion is exempt from providing quantitative and qualitative disclosures about market risk[144] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the period - The company's disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[145] - No material changes in internal control over financial reporting occurred during the period covered by this report[146] PART II — Other Information This part includes information on legal proceedings, risk factors, other significant events, and a list of exhibits filed with the report Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, though it may be subject to various claims in the ordinary course of business - The company is not a party to any material legal proceedings at this time[149] Item 1A. Risk Factors As a smaller reporting company, Cyclerion is not required to provide new risk factors in this quarterly report but refers readers to the 'Risk Factors' section in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - As a smaller reporting company, the registrant refers to the 'Risk Factors' section in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a comprehensive review of factors that could materially affect its business[150] Item 5. Other Information On August 4, 2025, the company entered into a Consulting Agreement with Rhonda Chicko, formalizing her role as Chief Financial Officer with an hourly compensation and a stock option grant. No Rule 10b5-1 plans were adopted or terminated by directors or Section 16 officers during Q2 2025 - On August 4, 2025, Cyclerion entered into a Consulting Agreement with Rhonda Chicko, formalizing her role as CFO with an hourly rate of $525.00 and a stock option grant for up to 25,000 shares[151] - No Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or Section 16 officers during the second quarter of 2025[152] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including the Consulting Agreement with Rhonda Chicko, CEO and CFO certifications, and XBRL documents - The report includes Exhibit 10.1, the Consulting Agreement with Rhonda Chicko dated August 4, 2025, and various certifications (31.1, 31.2, 32.1, 32.2) from the CEO and CFO[155] Signatures This section confirms the official signing of the report by the company's President, CEO, and CFO on August 5, 2025 - The report was signed by Regina Graul, President and CEO, and Rhonda Chicko, CFO, on August 5, 2025[158][159]