Full Press Release Details
INFORMATION STATEMENT
CYCLERION THERAPEUTICS, INC.
This information statement is being furnished to you as a holder of common stock of Ironwood Pharmaceuticals, Inc., or Ironwood, in connection with the distribution of shares of common stock of Cyclerion Therapeutics, Inc., or Cyclerion. Cyclerion is a wholly owned subsidiary of Ironwood that will hold, directly or indirectly, assets and liabilities related to Ironwood s soluble guanylate cyclase, or sGC, stimulators business. To implement the distribution, Ironwood will distribute all of the outstanding shares of Cyclerion common stock on a pro rata basis to holders of Ironwood common stock in a manner that is intended to be tax-free for U.S. federal income tax purposes.
You will receive one share of Cyclerion common stock for every 10 shares of Ironwood common stock held of record by you as of the close of business on March 19, 2019, the record date for the distribution. Registered holders of Ironwood common stock will receive cash in lieu of any fractional shares of Cyclerion common stock that those holders would have received after application of the above ratio. As discussed under The Separation and Distribution Trading Between the Record Date and Distribution Date, if you sell your shares of Ironwood common stock in the regular way market after the record date and before the distribution, you also will be selling your right to receive shares of Cyclerion common stock in connection with the distribution. Cyclerion expects the shares of Cyclerion common stock to be distributed by Ironwood to you on April 1, 2019. The date of distribution of Cyclerion common stock is referred to in this information statement as the distribution date.
No vote of Ironwood stockholders is required for the distribution. Therefore, you are not being asked for a proxy, and you are requested not to send Ironwood a proxy, in connection with the distribution. You do not need to pay any consideration, exchange or surrender your existing shares of Ironwood common stock or take any other action to receive your shares of Cyclerion common stock.
In connection with the distribution, Cyclerion has entered into a common stock purchase agreement pursuant to which, upon the completion of the distribution, certain investors will make an aggregate cash investment in Cyclerion of up to $175.0 million in exchange for shares of Cyclerion common stock. This transaction is referred to in this information statement as the private placement. See Certain Relationships and Related Party Transactions Private Placement.
There is no current trading market for Cyclerion common stock. Cyclerion expects that a limited market, commonly known as a when issued trading market, will develop on or shortly before the record date for the distribution, and that regular way trading of Cyclerion common stock will begin on the first trading day following the completion of the distribution. Cyclerion has applied to have its common stock listed on the Nasdaq Global Market under the symbol CYCN.
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we will be subject to reduced public company reporting requirements.
In reviewing this information statement, you should carefully consider the matters described under the caption Risk Factors beginning on page 20.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
A Notice of Internet Availability of Information Statement Materials containing instructions for how to access this information statement is first being mailed to Ironwood stockholders on or about March 15, 2019.
This information statement will be mailed to Ironwood stockholders who previously elected to receive a paper copy of Ironwood s materials.
The date of this information statement is March 14, 2019.
| PRESENTATION OF INFORMATION | i |
| QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION | 1 |
| INFORMATION STATEMENT SUMMARY | 11 |
| SUMMARY HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION | 19 |
| RISK FACTORS | 20 |
| CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS | 57 |
| DIVIDEND POLICY | 59 |
| CAPITALIZATION | 60 |
| UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS | 61 |
| MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 65 |
| BUSINESS | 75 |
| MANAGEMENT | 125 |
| EXECUTIVE COMPENSATION | 132 |
| CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS | 151 |
| SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 161 |
| THE SEPARATION AND DISTRIBUTION | 164 |
| MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES | 170 |
| DESCRIPTION OF CYCLERION S CAPITAL STOCK | 175 |
| WHERE YOU CAN FIND MORE INFORMATION | 180 |
| INDEX TO FINANCIAL STATEMENTS | F-1 |
PRESENTATION OF INFORMATION
Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement about Cyclerion assumes the completion of all of the transactions referred to in this information statement in connection with the separation and distribution.
Unless the context otherwise requires, references in this information statement to the following terms shall have the following respective meanings:
Ironwood refers to Ironwood Pharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries;
distribution refers to the distribution by Ironwood to Ironwood stockholders of record as of the record date of all of the outstanding shares of Cyclerion, as further described in this information statement;
sGC refers to soluble guanylate cyclase;
sGC business includes Ironwood s sGC stimulators business, including certain additional assets and liabilities associated with Ironwood s pipeline programs related to sGC stimulators;
separation refers to the separation of Ironwood s sGC business from Ironwood s other businesses and the creation, as a result of the distribution, of an independent, publicly traded company, Cyclerion, that holds the sGC business, as further described in this information statement; and
Cyclerion, we, us, our, our company and the company refer to Cyclerion, a Massachusetts corporation, together with its subsidiaries, as the context requires, in each case as they will exist, assuming the completion of all the transactions referred to in this information statement in connection with the separation and the distribution.
This information statement describes the businesses to be transferred to Cyclerion by Ironwood in the separation as if the transferred businesses were Cyclerion s businesses for all historical periods described. References in this information statement to Cyclerion s historical assets, liabilities, products, businesses or activities of Cyclerion s business are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the transferred businesses as the businesses were conducted as part of Ironwood prior to the separation.
You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations or as required by applicable law.
Websites described in this information statement and the content therein or connected thereto shall not be deemed incorporated into this information statement.
Trademarks, Trade Names and Service Marks
Cyclerion owns or has rights to use the trademarks, service marks and trade names that it uses in conjunction with the operation of its business, including CYCLERION and CYCLERION THERAPEUTICS, which may be registered or trademarked in the United States and other jurisdictions. Cyclerion s rights to its trademarks may be limited to select markets. Each trademark, trade name or service mark of any other company appearing in this information statement is, to Cyclerion s knowledge, owned by such other company.
Industry and Other Data
We obtained the industry and market data in this information statement from our own internal estimates and from industry and general publications and research, surveys, studies and trials conducted by third parties. We are responsible for all of the disclosure contained in this information statement, and we believe that this third-party data is generally reliable; however, we have not independently verified industry and market data from third-party sources. In addition, while we believe our estimates are reliable, they have not been verified by any independent source.
Estimates in this information statement of the patient populations for the diseases that we are targeting are based on published estimates of the rates of incidence of the diseases from scientific and general publications and research, surveys and studies conducted by third parties that we consider to be reliable, although such publications do not guarantee the accuracy or completeness of this information.
QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION
| What is Cyclerion and why is Ironwood separating Cyclerion s business and distributing Cyclerion s common stock? | Cyclerion, which is currently a wholly owned subsidiary of Ironwood, was formed to hold Ironwood s sGC business. The separation of Cyclerion from Ironwood and the distribution of Cyclerion common stock are intended to provide you with equity investments in two separate, independent public companies, each of which is able to focus on its respective business strategies. Ironwood and Cyclerion believe the separation will enable each business to pursue focused growth and investment strategies in its respective therapeutic areas of expertise resulting in the enhanced long-term performance of each business, as discussed in The Separation and Distribution Overview and The Separation and Distribution Reasons for the Separation. | |
| Why am I receiving this document? | Ironwood is delivering this information statement to you because you are a holder of record of shares of Ironwood common stock. If you remain a holder of shares of Ironwood common stock as of the close of business on March 19, 2019, you will be entitled to receive one share of Cyclerion common stock for every 10 shares of Ironwood common stock that you held of record at the close of business on such date. This information statement will help you understand how the separation will affect your investment in Ironwood and your investment in Cyclerion after the distribution. | |
| How will the separation of Cyclerion from Ironwood work? | To accomplish the separation, Ironwood will distribute all of the outstanding shares of Cyclerion common stock to Ironwood stockholders on a pro rata basis. | |
| Why is the separation of Cyclerion structured as a distribution? | Ironwood believes that a tax-free distribution for U.S. federal income tax purposes of shares of Cyclerion common stock to the Ironwood stockholders is an efficient way to separate its sGC business in a manner that will create long-term value for Ironwood, Cyclerion and their respective shareholders. For more information, see The Separation and Distribution Conditions to the Distribution. | |
| What is the record date for the distribution? | The record date for the distribution will be March 19, 2019. |
| When will the distribution occur? | It is expected that all of the shares of Cyclerion common stock will be distributed by Ironwood on April 1, 2019, to holders of record of Ironwood common stock at the close of business on March 19, 2019. We refer to the date on which shares of Cyclerion common stock are distributed as the distribution date. | |
| What do stockholders need to do to participate in the distribution? | Nothing. Stockholders of Ironwood as of the record date will not be required to take any action to receive Cyclerion common stock, but are urged to read this entire information statement carefully. No stockholder approval of the distribution is required or sought. Therefore, you are not being asked for a proxy to vote on the separation, and you are requested not to send us a proxy. You will neither be required to pay anything for the shares of Cyclerion common stock nor be required to surrender any shares of Ironwood common stock to participate in the distribution. Please do not send in your Ironwood stock certificates. | |
| The distribution will not affect the number of outstanding shares of Ironwood common stock or any rights of Ironwood stockholders, although it will affect the market value of each outstanding share of Ironwood common stock. See Questions and Answers about the Separation and Distribution Will the distribution affect the market price of my Ironwood common stock? for more information. | ||
| How will Ironwood distribute shares of Cyclerion common stock? | Registered stockholders : If you are a registered stockholder (meaning you hold physical Ironwood stock certificates or you own your shares of Ironwood common stock directly through an account with Ironwood s transfer agent, Computershare Trust Company, N.A., or Computershare), the distribution agent will credit the number of whole shares of Cyclerion common stock you receive in the distribution to your book-entry account on or shortly after the distribution date, and the distribution agent will mail you a check for any cash in lieu of fractional shares you are entitled to receive. Street name or beneficial stockholders : If you own your shares of Ironwood common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the number of whole shares of Cyclerion common stock you receive in the distribution on or shortly after the distribution date. Please contact your bank, broker or other nominee for further information about your account. |
| We will not issue any physical stock certificates to any stockholders receiving shares in the distribution, unless requested through Computershare. See The Separation and Distribution When and How You Will Receive the Distribution for more information. | ||
| How many shares of Cyclerion common stock will I receive in the distribution? | Ironwood will distribute to you one share of Cyclerion common stock for every 10 shares of Ironwood common stock you hold of record as of the close of business on March 19, 2019, the record date. Based on approximately 155,488,389 shares of Ironwood common stock outstanding as of February 25, 2019, a total of approximately 15,548,838 shares of Cyclerion common stock will be distributed. For more information, see The Separation and Distribution The Number of Shares of Cyclerion Common Stock You Will Receive. | |
| Will Cyclerion issue fractional shares in the distribution? | Cyclerion will not distribute fractional shares of its common stock in the distribution. Instead, all fractional shares that Ironwood registered stockholders would otherwise have been entitled to receive will be aggregated into whole shares and sold in the open market by the distribution agent. We expect the distribution agent, acting on behalf of Ironwood, to take about two weeks after the distribution date to fully distribute the aggregate net cash proceeds of these sales on a pro rata basis (based on the fractional share such holder would otherwise be entitled to receive) to those stockholders who would otherwise have been entitled to receive fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares. For more information, see The Separation and Distribution The Number of Shares of Cyclerion Common Stock You Will Receive. | |
| What are the conditions to the distribution? | The distribution is subject to the satisfaction (or waiver by Ironwood in its sole and absolute discretion) of a number of conditions to be set forth in the separation agreement, including, among others: |
| the SEC declaring effective Cyclerion s registration statement on Form 10 of which this information statement forms a part, and no stop order relating to the registration statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the SEC, and the distribution of the information statement (or the Notice of Internet Availability of the Information Statement) to all holders of record of shares of Ironwood common stock as of the close of business on the record date; | ||
| the shares of Cyclerion common stock to be distributed shall have been accepted for listing by Nasdaq, subject to official notice of distribution; | ||
| the receipt and continuing validity of either (i) a private letter ruling from the Internal Revenue Service, or the IRS, and an opinion from KPMG LLP, both satisfactory to Ironwood s board of directors, together confirming that the distribution, together with certain related transactions, generally is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended, or the Code, or (ii) an opinion of KPMG LLP, satisfactory to Ironwood s board of directors, confirming that the distribution, together with certain related transactions, generally is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code; | ||
| the receipt and continuing validity of an opinion from an independent appraisal firm to Ironwood s board of directors, that is in form and substance acceptable to Ironwood in its sole and absolute discretion, confirming the solvency of Cyclerion after the distribution and, as to the compliance by Ironwood in declaring to pay the distribution, with surplus requirements under Delaware corporate law; | ||
| all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the distribution shall have been received; | ||
| no order, injunction, or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the distribution or any of the related transactions shall be pending, threatened, issued or in effect; |
| the board of directors of Ironwood shall have declared the distribution and approved all related transactions (and such declaration and approval not having been withdrawn); | ||
| Cyclerion shall have executed and delivered the transaction agreements relating to the separation; and | ||
| no other event or development existing or having occurred that, in the sole and absolute judgment of Ironwood s board of directors, makes it inadvisable to effect the distribution and other related transactions. | ||
| Ironwood and Cyclerion cannot assure you that any or all of these conditions will be met, and Ironwood may waive any of these conditions to the distribution. In addition, Ironwood can determine, at any time, not to proceed with the distribution. For more information, see The Separation and Distribution Conditions to the Distribution. | ||
| What is the expected date of completion of the distribution? | The completion and timing of the distribution are dependent upon a number of conditions. It is expected that the shares of Cyclerion common stock will be distributed by Ironwood on April 1, 2019 to the holders of record of shares of Ironwood common stock at the close of business on the record date. However, no assurance can be provided as to the timing of the distribution or that all conditions to the distribution will be met. | |
| Can Ironwood decide to cancel the distribution of Cyclerion common stock even if all the conditions have been met? | Yes, until the distribution has occurred, Ironwood has the right to terminate the distribution, even if all of the conditions are satisfied. See The Separation and Distribution Conditions to the Distribution for more information. | |
| What if I want to sell my Ironwood common stock or my Cyclerion common stock? | You should consult with your advisors, such as your broker, bank or tax advisor. | |
| What is regular way and ex- distribution trading of Ironwood stock? | Beginning on or shortly before the record date and continuing up to and including the distribution date, it is expected that there will be two markets in shares of Ironwood common stock: a regular way market and an ex-distribution market. Shares of Ironwood common stock that trade in the regular way market will trade with an entitlement to shares of Cyclerion common stock distributed pursuant to the distribution. Shares that trade in the ex-distribution market will trade without an entitlement to shares of Cyclerion common stock distributed pursuant to the distribution. |
| If you hold shares of Ironwood common stock on the record date and you decide to sell any shares of Ironwood common stock before the distribution date, you should make sure your broker, bank or other nominee understands whether you want to sell your shares of Ironwood common stock with or without your entitlement to receive Cyclerion common stock pursuant to the distribution. See The Separation and Distribution Trading Between the Record Date and Distribution Date for more information. | ||
| Where will I be able to trade shares of Cyclerion common stock? | Currently, there is no public market for Cyclerion common stock. Cyclerion has applied to have its common stock authorized for listing on the Nasdaq Global Market under the symbol CYCN. | |
| Cyclerion anticipates that trading in shares of its common stock will begin on a when issued basis on or shortly before the record date for the distribution and will continue up to and including the distribution date. When issued trading in the context of a separation refers to a sale or purchase made conditionally on or before the distribution date because the securities of the separated entity have not yet been distributed. When issued trades generally settle within two weeks after the distribution date. On the first trading day following the distribution date, any when issued trading of our common stock will end and regular way trading will begin. Regular way trading refers to trading after the security has been distributed and typically involves a trade that settles on the second full trading day following the date of the trade. See The Separation and Distribution Trading Between the Record Date and Distribution Date for more information. We cannot predict the trading prices for our common stock before, on or after the distribution date. | ||
| What will happen to the listing of shares of Ironwood common stock? | Shares of Ironwood common stock will continue to trade on the Nasdaq Global Select Market after the distribution. | |
| Will the number of shares of Ironwood common stock that I own change as a result of the distribution? | No. The number of shares of Ironwood common stock that you own will not change as a result of the distribution. |
| Will the distribution affect the market price of my Ironwood common stock? | Yes. As a result of the distribution, Ironwood expects the trading price of shares of Ironwood common stock immediately following the distribution to be lower than the regular way trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of the sGC business. Furthermore, as the market assesses Ironwood following the separation, the trading price of shares of Ironwood common stock may fluctuate. There can be no assurance that, following the distribution, the combined trading prices of Ironwood common stock and Cyclerion common stock will equal or exceed what the trading price of Ironwood common stock would have been in the absence of the separation, and it is possible the post-distribution combined equity value of Ironwood and Cyclerion will be less than Ironwood s equity value prior to the distribution. | |
| What are the material U.S. federal income tax consequences of the distribution? | It is a condition to the distribution that Ironwood receive either (i) a private letter ruling from the IRS and an opinion from KPMG LLP, both satisfactory to Ironwood s board of directors, together confirming that the distribution, together with certain related transactions, generally is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, or (ii) an opinion of KPMG LLP, satisfactory to Ironwood s board of directors, confirming that the distribution, together with certain related transactions, generally is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Assuming that the distribution, together with certain related transactions, so qualifies, for U.S. federal income tax purposes, no gain or loss will be recognized by you and no amount will be included in your income upon receipt of shares of Cyclerion common stock pursuant to the distribution. You will, however, recognize gain or loss for U.S. federal income tax purposes with respect to cash received in lieu of a fractional share of Cyclerion common stock. | |
| You should consult your own tax advisor as to the particular consequences of the distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as non-U.S. tax laws. For more information regarding the material U.S. federal income tax consequences of the distribution, see Material U.S. Federal Income Tax Consequences. |
| How will I determine my tax basis in the shares of Cyclerion common stock I receive in the distribution? | For U.S. federal income tax purposes, your aggregate basis in the common stock that you hold in Ironwood and the new Cyclerion common stock received in the distribution (including any fractional share interest in Cyclerion common stock for which cash is received) will equal the aggregate basis in the shares of Ironwood common stock held by you immediately before the distribution, allocated between your shares of Ironwood common stock and Cyclerion common stock (including any fractional share interest in Cyclerion common stock for which cash is received) you receive in the distribution in proportion to the relative fair market value of each on the distribution date, for which the relative closing prices on the Nasdaq Stock Market will be used. You should consult your own tax advisor as to the particular consequences of the distribution to you, including the application of the tax basis allocation rules and the application of state, local and non-U.S. tax laws. | |
| What will Cyclerion s relationship be with Ironwood following the distribution? | To effect a decisive and efficient separation into two thriving companies, Cyclerion intends to enter into a separation agreement and certain other agreements with Ironwood, including a tax matters agreement, an employee matters agreement, a development agreement, an intellectual property license agreement, a transition services agreement under which we will temporarily receive certain services from Ironwood and a second transition services agreement under which we will temporarily provide certain services to Ironwood. These agreements will provide for the separation between Ironwood and Cyclerion of the assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) of Ironwood attributable to periods prior to, at and after the distribution and will govern the relationship between Ironwood and Cyclerion subsequent to the completion of the distribution. For additional information regarding the separation agreement and other transaction agreements, see Risk Factors Risks Related to the Separation and the Private Placement and Certain Relationships and Related Person Transactions Agreements with Ironwood. |
| Who will manage Cyclerion after the distribution? | Cyclerion will benefit from having in place a management team with a substantial background in the biopharmaceuticals business. Cyclerion s management team possesses deep knowledge of and experience in its industry. Cyclerion s management team is expected to include Peter M. Hecht, Ph.D., Ironwood s Chief Executive Officer who is expected to be Cyclerion s Chief Executive Officer after the distribution, Mark G. Currie, Ph.D., Ironwood s Senior Vice President, Chief Scientific Officer and President of R&D who is expected to be Cyclerion s President after the distribution and William Huyett, Ironwood s Chief Operating Officer who is expected to be Cyclerion s Chief Financial Officer after the distribution. For more information regarding Ironwood s management team and leadership structure, see Management. | |
| How will Cyclerion receive its initial cash capitalization? | In connection with the distribution, Cyclerion has entered into a common stock purchase agreement pursuant to which, upon the completion of the distribution, certain investors will make an aggregate cash investment in Cyclerion of up to $175.0 million in exchange for shares of Cyclerion common stock. Our management believes that the proceeds from the private placement, after the payment of certain separation-related expenses, will be sufficient to fund our operating expenses and capital expenditure requirements through the first quarter of 2021. | |
| Are there risks associated with owning Cyclerion common stock? | Yes. Ownership of Cyclerion common stock is subject to both general and specific risks related to Cyclerion s business, the industry in which it operates, its ongoing relationships with Ironwood and its status as a separate, publicly traded company. Ownership of Cyclerion common stock is also subject to risks related to the separation. These risks are described in the Risk Factors section of this information statement beginning on page 20. You are encouraged to read that section carefully. | |
| Does Cyclerion plan to pay dividends? | Cyclerion does not expect to pay a regular cash dividend following the distribution. The payment of any dividends in the future, and the timing and amount thereof, is within the discretion of Cyclerion s board of directors. See Dividend Policy. |
| Who will be the distribution agent, transfer agent and registrar for the Cyclerion common stock? | The distribution agent, transfer agent and registrar for Cyclerion common stock will be Computershare Trust Company, N.A. For registered holders with questions relating to the transfer or mechanics of the stock distribution, you should contact: | |
| Computershare Investor Services PO BOX 505000 Louisville, KY 40233-5000 Tel: 800-662-7232 | ||
| How can I contact Ironwood or Cyclerion with any questions? | Before the distribution, if you have any questions relating to Ironwood or Cyclerion s business performance, you should contact: | |
| Ironwood Pharmaceuticals, Inc. | ||
| Investor Relations Department | ||
| Meredith Kaya, Vice President, Investor Relations and Corporate Communications | ||
| Tel: 617-374-5082 | ||
| E-mail: mkaya@ironwoodpharma.com | ||
| After the distribution, Cyclerion shareholders who have any questions relating to Cyclerion s business performance should contact Cyclerion at: | ||
| Cyclerion Therapeutics, Inc. | ||
| Brian Cali, Ph.D. | ||
| Head of Investor Relations and Corporate Communications | ||
| Address: 301 Binney Street, Cambridge, MA 02142 | ||
| Tel: 857-338-3262 | ||
| E-mail: bcali@cyclerion.com |
INFORMATION STATEMENT SUMMARY
The following is a summary of material information discussed in this information statement. This summary may not contain all the details concerning the separation or other information that may be important to you. To better understand the separation and Cyclerion s business and financial position, you should carefully review this entire information statement, including the risks discussed under Risk Factors.
Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement assumes the completion of all of the transactions referred to in this information statement in connection with the separation. Some of the statements in this summary constitute forward-looking statements. See Cautionary Statement Concerning Forward-Looking Statements.
We are a clinical-stage biopharmaceutical company harnessing the power of sGC pharmacology to discover, develop and commercialize breakthrough treatments for serious and orphan diseases. Our focus is enabling the full therapeutic potential of next-generation sGC stimulators. sGC stimulators are small molecules that act synergistically with nitric oxide on sGC to boost production of cyclic guanosine monophosphate, or cGMP. cGMP is a key second messenger that, when produced by sGC, regulates diverse and critical biological functions throughout the body including blood flow and vascular dynamics, inflammatory and fibrotic processes, metabolism and neuronal function. We believe that the key to unlocking the full therapeutic potential of the nitric oxide-cGMP pathway is to design differentiated next-generation sGC stimulators that preferentially modulate pathway signaling in tissues of greatest relevance to the diseases they are developed to treat. This targeted approach is intended to maximize the potential benefits of nitric oxide-cGMP pathway stimulation in disease-relevant tissues. We are led by an accomplished team, many of whom have worked together previously at Ironwood, with an exceptional track record of discovering, developing and commercializing meaningful therapies for patients while creating value for stockholders. Our strategy rests on a solid scientific foundation that is enabled by our people and capabilities, external collaborations and a responsive capital allocation approach.
We have an extensive portfolio of five differentiated sGC stimulators with several pipeline catalysts expected in 2019. The following table summarizes our programs:
Status of selected key development programs as of March 11, 2019. Represents current phase of development, does not correspond to the completion of a particular phase.
We leverage the therapeutic potential of nitric oxide signaling by modulating the nitric oxide-cGMP pathway via pharmacologically tailored sGC stimulation. Nitric oxide signaling plays a central role in regulating diverse aspects of human physiology throughout the body, including vascular smooth muscle tone and blood flow, as well as processes that influence inflammation, fibrosis, metabolism and neuronal function. Deficient nitric oxide signaling is linked to a wide range of cardiovascular, metabolic, inflammatory, fibrotic and neurological diseases. Stimulation of sGC is clinically validated by ADEMPAS , an sGC stimulator marketed by Bayer, that represents an important first step in demonstrating the therapeutic potential of this mechanism. In order to realize the significant potential of sGC stimulation to enable the development of important new medicines, we are focused on developing next generation sGC stimulators.
We design sGC stimulators with distinct pharmacologic and biodistribution properties that preferentially enhance nitric oxide-cGMP signaling in target tissues of greatest relevance to the diseases they are developed to treat. The resulting sGC stimulators are highly differentiated from each other, as well as from other sGC modulators and molecules that target this pathway via other mechanisms. This approach to the therapeutic application of nitric oxide-cGMP pharmacology is intended to allow us to harness the powerful multidimensional pharmacology of sGC stimulation for clinical application in serious and orphan diseases.
We have discovered and are advancing a pipeline of five differentiated sGC stimulator programs whose properties are tailored for distinct serious and orphan diseases with significant unmet clinical need.
Olinciguat is an orally administered, once-daily, vascular sGC stimulator that we believe is well suited for the treatment of sickle cell disease, or SCD, given its distribution to the vasculature
and highly perfused organs, such as the kidney and lungs, which are frequently affected by this disease. By amplifying nitric oxide signaling, we believe that olinciguat has the potential to reduce the proportion of sickled cells, decrease vascular inflammation and cell adhesion, and improve nitric oxide-mediated vasodilation. For patients with SCD, we believe this may translate into reduction in debilitating daily symptoms such as chronic pain and fatigue, decrease in anemia, reduction in painful vaso-occlusive crises, or VOCs, and end-organ protection (especially for the kidney, heart and lung) potentially leading to an increase in survival. Olinciguat has been granted Orphan Drug Designation for SCD by the U.S. Food and Drug Administration, or the FDA, and is currently in a Phase 2 study, STRONG-SCD, that is expected to enroll approximately 88 patients. Following the completion of our ongoing Phase 2 study, should data warrant, we intend to advance olinciguat into late-stage development for SCD and, if approved, commercialize on our own in the United States and alone or through licensing arrangements with partners around the world. We expect results from this study in the second half of 2019.
Praliciguat is an orally administered, once-daily systemic sGC stimulator that we believe is well suited for the treatment of serious cardiometabolic diseases given its very extensive distribution into tissues, particularly adipose, kidney, heart and liver. We believe this distribution profile is essential to realize the potential of sGC pathway pharmacology to treat cardiometabolic diseases that are characterized by adipose inflammation, metabolic dysfunction and associated multi-organ etiology and involvement. We are assessing the potential of praliciguat to treat two such diseases: diabetic nephropathy, or DN, and heart failure with preserved ejection fraction, or HFpEF. We expect results from Phase 2 studies in these indications in the second half of 2019.
IW-6463 is an orally administered CNS-penetrant sGC stimulator that, because it readily crosses the blood-brain barrier, affords an unprecedented opportunity to expand the utility of sGC pharmacology to serious neurodegenerative diseases. Clinical and nonclinical research suggests that nitric oxide signaling plays a critical role in the central nervous system, or CNS, in memory formation and retention, control of cerebral blood flow and modulation of neuroinflammation. Nitric oxide is a potent neurotransmitter, and impaired nitric oxide-sGC-cGMP signaling is believed to play an important role in the pathogenesis of several neurodegenerative diseases. In preclinical models, IW-6463 has been associated with an increase in cerebral blood flow, improved neuronal health and function, reduced markers of neuroinflammation and enhanced cognition. CNS pharmacological activity of IW-6463 has been observed preclinically using multiple non-invasive techniques that can also be employed in early human clinical studies. Our first-in-human study of IW-6463 initiated in January of 2019 with results expected in the second half of 2019.
Our liver-targeted sGC stimulator will be orally administered and designed to selectively partition to the liver. By achieving liver concentrations many fold higher than corresponding plasma concentrations, we intend to maximize hepatic pharmacology. In animal models of liver fibrosis treated with systemic sGC stimulators, we have observed reductions in liver fibrosis, inflammation and steatosis, pathophysiological processes that underlie multiple chronic liver diseases. We expect to nominate a development candidate in the first half of 2019 and progress to filing an Investigational New Drug/Clinical Trial Application, or IND/CTA, thereafter.
Our lung-targeted sGC stimulator will be administered via inhalation and will be aimed at realizing the full potential of sGC stimulation in pulmonary diseases by selectively increasing exposure in the lung. Preclinically, our lead molecule is highly retained in the lung with greater than 50-fold selectivity for lung over plasma. In addition, in preclinical studies, the lead molecule is metabolically stable in the lung, whereas it is unstable in the plasma with rapid systemic clearance. We expect to nominate a development candidate in the first half of 2019 and progress to filing an IND/CTA thereafter.
We have a comprehensive intellectual property strategy to protect our platform and related proprietary technology that covers composition of matter, method of use, formulations and process development.
Value-Creating Enablers
People and capabilities
We are leaders in targeted sGC stimulator chemistry and nitric oxide-cGMP pathway pharmacology. Our founding team has deep knowledge and significant experience in cGMP pathway research and development, from the discovery and development of LINZESS (linaclotide), an Ironwood product that leverages the pharmacology of the guanylate cyclase-C-cGMP pathway, to the development of the sGC stimulator chemistry libraries and systems pharmacology data that gave rise to the current portfolio of assets and will serve as the foundation for our future innovation.
We have an exceptional team with a proven track record at all levels within our organization. We have broad expertise throughout our organization in discovering, developing and commercializing category-leading products, and are led by a management team with a history of success delivering innovative therapies to patients while creating value for stockholders.
External collaboration
We leverage a diverse cross-disciplinary network of external advisors and experts to advance our drug candidates. We do this in three ways. First, we actively engage leading experts to access additional technologies and expertise to advance our programs. Second, we establish disease-area advisory boards of physicians, patients and payors to provide insights into the unmet medical need and to support the design of clinical trials. Finally, we use a pharmaceutical advisory board made up of veteran drug hunters with broad industry experience and a track record of innovation to help us refine our R&D strategy.
We will apply a best-owner approach to our compounds whereby we develop and commercialize product candidates independently or through a partner depending on which path we believe will offer the greatest risk-adjusted value for our shareholders and accelerate global patient access to our drugs. We intend to prioritize development and commercialization in diseases characterized by structurally attractive markets where we can successfully commercialize on our own. At this time, we do not have any partnerships for any of our product candidates and we intend to apply this best owner approach as we make decisions regarding potential partnerships.
Capital allocation and economics
The capital allocation decision making and financial management we use in our business will enable us to continually deploy capital and people to the most promising opportunities. Highlights of our capital allocation and financial management strategy include:
Decisive capital allocation: We plan to establish a high threshold for therapeutic differentiation and compelling business case in each program.
Elastic, externalized cost structure: Our experienced team will seek to use outside supplier/partners wherever possible, in order to benefit from any economies-of-scale and skill sets that such suppliers and partners provide while minimizing our fixed costs.
Mission-appropriate infrastructure: Our infrastructure is designed to meet the needs of a multi-program development company intent on prosecuting and developing the sGC mechanism, generating and protecting key IP, compliance and attracting and retaining talent to further
advance our five lead sGC stimulator programs and discover additional disease-targeted sGC stimulators.
Development program-based management structure: Our program leaders are accountable for performance against goals for each program based on clinical and scientific, cost and timeline performance metrics.
Summary of Risk Factors
An investment in Cyclerion common stock is subject to a number of risks, including risks related to our business, risks related to the separation and risks related to our common stock. The following list of risk factors is not exhaustive. Please read the information in the section captioned Risk Factors for a more thorough description of these and other risks.
Risks Related to Our Business
Because we are a clinical-stage biopharmaceutical company with a limited operating history and no products approved for commercial sale, valuing our business and predicting our prospects is challenging.
Our business has incurred significant losses and we anticipate that we will continue to incur significant losses for the foreseeable future.
We will need to raise additional funding to advance our product candidates, which may not be available on acceptable terms, or at all.
The target-to-disease approach we are taking to discover and develop product candidates targeting the cGMP may never lead to marketable products.
We may encounter substantial delays in our clinical studies, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
If we encounter difficulties in enrolling subjects in our clinical studies, we could be delayed or prevented from proceeding with clinical trials of our product candidates.
The regulatory approval processes of the FDA, and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable.
Our product candidates may cause undesirable side effects that delay or prevent their regulatory approval, result in label restrictions or result in harmful consequences following any potential marketing approval.
We face significant competition, including from approved products and product candidates in development, and our competitors may achieve regulatory approval before us or develop therapies that are safer, more advanced or more effective than ours.
If third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
We rely completely on third-party suppliers to manufacture our clinical drug supplies for our product candidates, and we intend to rely on third parties to produce non-clinical, clinical and commercial supplies of any future product candidate.
If we are unable to adequately protect our proprietary technology, others could compete against us more directly, which would have a material adverse impact on our business, prospects, financial condition and results of operations.
If the market opportunities for our product candidates are smaller than we estimate, or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability may be harmed.
Even if we obtain regulatory approval for our product candidates, our product candidates may not achieve broad market acceptance by patients, physicians, healthcare payors or others in the medical community.
Our ability to generate meaningful revenues in foreign countries may be limited due to the strict price controls and reimbursement limitations imposed by governments outside of the United States.
Risks Related to the Separation and the Private Placement
We may not achieve some or all of the expected benefits of the separation, and the separation could harm our business, prospects, financial condition and results of operations.
We have no history of operating as an independent company and we expect to incur increased administrative and other costs following the separation by virtue of our status as an independent public company.
The separation may impede our ability to attract and retain key personnel, which could materially harm our business.
The separation may result in disruptions to, and harm our relationships with, our strategic business partners.
If the distribution, together with certain related transactions, does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, Ironwood and its stockholders could be subject to significant tax liabilities, and we could be required to indemnify Ironwood for material taxes pursuant to indemnification obligations under the tax matters agreement.
We may not be able to engage in attractive strategic or capital-raising transactions following the separation.
Our agreements with Ironwood may not reflect terms that would have resulted from negotiations with unaffiliated third parties.
The combined post-separation value of Ironwood and our common stock may not equal or exceed the pre-separation value of Ironwood common stock.