Business
Cyclerion Announces Definitive Agreement for Zagociguat and CY3018
Certain Cyclerion shareholders and new investors have agreed to invest $81M to launch a new company targeting diseases of mitochondrial dysfunction Cyclerion
About this update from Cyclerion Therapeutics, Inc.
[{"type":"text","content":"Certain Cyclerion shareholders and new investors have agreed to invest $81M to launch a new company targeting diseases of mitochondrial dysfunction Cyclerion to receive $8M in cash and 10% equity in the new company in exchange for its zagociguat and CY3018 assets Definitive agreement signing triggers previously announced $5M equity investment in Cyclerion CAMBRIDGE, Mass., May 11, 2023 (GLOBE NEWSWIRE) -- Cyclerion Therapeutics, Inc. (Nasdaq: CYCN) announced today that it has signed a definitive agreement with a new private company (“NewCo”) to sell two of its sGC stimulator assets in exchange for cash and equity ownership. Investors in NewCo have agreed to invest $81M to develop zagociguat (previously CY6463) to treat MELAS* and other diseases associated with mitochondrial dysfunction and advance CY3018. Under the terms of the asset purchase agreement, Cyclerion will receive an $8M cash payment at closing, reimbursement for all expenses related to zagociguat and CY3018 for the period between the 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. Current Cyclerion shareholders including Invus and CEO Peter Hecht are participating in the capitalization of NewCo. They are joined in the NewCo investor syndicate by Venrock, J Wood Capital and Sanofi Ventures. The transaction is subject to approval by Cyclerion shareholders. Each of the current Cyclerion investors who are participating in the NewCo capitalization have agreed to vote their Cyclerion shares in favor of the transaction. Following the closing, NewCo will be solely responsible for all activities and expenses related to developing and commercializing zagociguat and CY3018. Signing of the definitive agreement triggered the previously announced $5M equity investment by CEO Peter Hecht. This investment will take place on May 19, 2023, and Hecht will receive a mix of common stock and nonvoting convertible preferred stock of Cyclerion at a minimum purchase price of $0.434 per share, subject to adjustment for any reverse stock split or similar event. “We are pleased to see our zagociguat and CY3018 assets attracting the capital and capabilities they will need to continue their development in mitochon...