Cyclerion Enters into Exclusive Negotiation Period and Binding Equity Investment Agreement
April 4, 2023
Rare Daily Staff
Cyclerion Therapeutics, a 2019 spinout of Ironwood Pharmaceuticals, said its independent members of its board of directors has reviewed a non-binding proposal received from an entity formed by investors that include the company’s CEO Peter Hecht to purchase the company’s zagociguat and CY3018 assets.
After consultation with its legal and financial advisors, the independent board members have concluded that the proposal merits further pursuit. Cyclerion has entered an exclusive negotiation arrangement for a limited period to allow the parties to negotiate binding documentation.
In addition, Cyclerion has entered into a binding agreement with Hecht for him to make an equity investment in Cyclerion of $5 million in cash for common stock or nonvoting convertible preferred stock of Cyclerion, the purchase price, consistent with Nasdaq rules, to be at or above the market price at the time of signing that agreement.
The closing of the equity investment is contingent upon negotiation and completion of definitive documentation associated with the above transaction and would take place six business days after the signing of these documents. The proceeds are intended to support ongoing operations.
The transaction remains subject to approvals by the board of Cyclerion and the company’s shareholders. The Company said it does not plan to provide further comment until an agreement is reached or the discussions are terminated.
Zagociguat may have potential as a first-ever therapy for patients with this rare, genetic mitochondrial disease known as MELAS. The U.S. Food and Drug Administration granted it Orphan Drug designation. its next-generation development candidate, CY3018, has attributes that make it especially well-suited for treating cognitive impairment associated with schizophrenia and other neuropsychiatric indications. Cyclerion was looking to secure a partnership or other funding mechanism to develop the program.
At the end of December, the company has $13.4 million. In reporting its year-end results, the company noted the difficult capital markets and said it was evaluating the best combination of capital, capabilities, and transactions available to it to advance the development of zagociguat and its other clinical development candidates and to maximize shareholder value.
Photo: Peter Hecht, CEO of Cyclerion
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