Cyclerion Therapeutics, Inc. (CYCN) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today. I am Regina Graul, Chief Executive Officer of Cyclerion Therapeutics. I'm joined today by Dr. Husseini Manji, a globally recognized leader in neuroscience and mental health innovation. Dr. Manji's distinguished career spans leadership roles at the National Institute of Health, where he advanced foundational research on synaptic plasticity and at Janssen, Johnson & Johnson, where he served as Global Head of Neuroscience, driving the development of novel treatments for mood disorders. He currently holds professorships at both Oxford University and Yale University, focusing on severe neuropsychiatric disorders and as a member of the National Academy of Medicine. Dr. Manji also played a key leadership role in translating the scientific discovery of esketamine's potential into SPRAVATO, the FDA-approved treatment for treatment-resistant depression. Dr. Manji is widely regarded as a thought leader in mental health policy and innovation with hundreds of peer-reviewed publications and a track record of translating science into transformative therapies. Dr. Manji is an adviser to Cyclerion and has been instrumental in informing the strategy for our lead program, CYC-126. We're excited to share how we are pioneering a new therapeutic category in neuropsychiatry, one that leverages precision anesthesia, advanced EEG-guided technology and deep clinical precedence to address the enormous unmet need in treatment-resistant depression. Before we get started, I would like to remind everyone that certain matters discussed in this presentation are forward-looking statements. We may, in some cases, use terms such as potential, may, expects, plans, could, opportunity, intends or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements involve risks, uncertainties and other factors that may cause actual results, performances or achievements to be materially different from the information expressed or implied by these forward-looking statements. We caution you that these statements are based on a combination of facts and factors currently known by us in our projections of the future about which we cannot be certain. Forward-looking statements in this presentation include, but are not limited to, statements about our ability to develop product candidates, the timing of our initiation of our Phase II proof-of-concept study, the design of our Phase II proof-of-concept study, the expected timing of our milestone payments related to Akebia clinical trials, our anticipated capital requirements, the timing of related milestones and availability of clinical data, creation of shareholder value and adoption of our product candidates once commercialized. We cannot assure you that the forward-looking statements in this presentation will prove to be accurate. Actual performance and results may differ materially from those projected or suggested in the forward-looking statements due to various risks and uncertainties, including those under the heading Risk Factors in our annual report on Form 10-K filed with the SEC on March 4, 2025. For today's call, I will first provide a brief overview of Cyclerion and introduce you to CYC-126, our lead therapeutic candidate. Dr. Manji will then provide additional context in the target patient population, procedure and our proof-of-concept clinical study. We will then transition into product development and the substantial progress we've made this year, including our recently announced Medsteer collaboration. We'll follow with our regulatory strategy across Australia and the United States, then a financial snapshot and capital expectations. Finally, we'll walk through the expected development time line and key milestones ahead that chart our path toward Phase II proof-of-concept readouts. Cyclerion has been relaunched with a clear mission to pioneer a new class of neuropsychiatric therapies that blend precision anesthesia, real-time brain monitoring and scalable medical technology. We intentionally operate as a lean, highly expert team, small enough to move with speed, but built around leaders in neuropsychiatry, anesthesia, engineering, clinical development, intelligent medical systems and drug device integration. Our team has collectively led many pivotal studies, secured numerous global regulatory approvals and launched commercial products across neurology and psychiatry. Further differentiating Cyclerion is our platform vision, technology-enabled anesthetic-based therapeutics that can precisely guide the brain into targeted EEG-defined states with potential therapeutic benefit across neuropsychiatric conditions. This is fundamentally different from developing another conventional medicine. It is a new mechanism-driven procedural approach designed to modulate brain function in a controlled and reproducible way. With foundational intellectual property from MIT, a robust collaboration with Medsteer announced yesterday and compelling clinical precedents from multiple propofol studies, we are positioned to lead a new field at the intersection of neuroscience, anesthesia and precision medicine. We are building more than a single product. We are creating a capital-efficient platform and procedural model designed to expand across multiple neuropsychiatric indications over time. CYC-126 is designed to be the first individualized precision-delivered treatment for treatment-resistant depression based on evidence that controlled sedation can recalibrate dysfunctional neural network communications. The treatment involves 2 stages that reflect how CYC-126's durable antidepressant effects may consolidate over time. First, the induction phase with treatments 3 times per week for 3 weeks. This initial treatment intends to rapidly establish EEG-defined brain states. Each session is intended to last approximately 2 to 3 hours. Our EEG-guided system is being designed to adjust dosing in real time with a level of precision that manual non-EEG-guided anesthesia simply cannot achieve. The induction phase is followed by a maintenance phase with potentially once monthly dosing. This phase is intended to reinforce network level changes, prolong durability and reduce relapse risk, conceptually similar to maintenance paradigms used in other neuromodulatory treatments like ECT or TMS, but intended to have greater precision and control. Across both stages, the technology is designed to act as a copilot to the anesthesiologist, enabling individualized dosing informed by each patient's unique brain state response. We believe CYC-126 will not only leverage familiar generic anesthetics with well-known safety histories, it will also fit naturally into hospital PACU workflows and be delivered in a highly monitored environment. For patients, this represents a fundamentally new paradigm, personalized, rapid-acting and designed for durable benefit. CYC-126 represents a fundamentally new therapeutic approach for treatment-resistant depression, one that uses 2 well-known anesthetics, but is designed to deliver them in an entirely new, highly controlled way. The therapy will integrate 4 components into a single unified product. The drugs, propofol and dexmedetomidine, a continuous EEG-based monitor, a decision-making algorithm that interprets the EEG in real time and infusion pumps for precise drug delivery. Here is how the system works. Throughout the procedure, the patient's brain activity is continuously measured using EEG. That signal is incorporated into our control software algorithm to support precise adjustments of anesthetic delivery and maintenance of a defined therapeutic sedation state. In other words, we define the target sedation state, and the system is designed to guide dosing over time to support maintenance of a personalized reproducible brain state signature that we believe underpins antidepressant effects. This level of precision potentially directs and addresses a major limitation of prior propofol clinical studies, the inability to consistently achieve and maintain the therapeutic EEG state. CYC-126 has the potential to offer hope to patients who are searching for an option that is effective, durable, predictable and safe. We believe this approach has the potential to be a transformative new treatment layer for millions of people living with treatment-resistant depression. I would now like to hand over to Dr. Husseini Manji, who will discuss the significant unmet need in treatment-resistant depression in CYC-126 planned Phase II proof-of-concept study.

Thank you, Regina. I'm pleased to be able to provide my thoughts on this innovative approach to treat TRD or Treatment-Resistant Depression. As you may know, I developed SPRAVATO because of my conviction that novel improved treatments for TRD need to focus on plasticity pathways. And that's what this novel approach with Cyclerion-126 does. So hopefully, it will represent an important much needed addition to our therapeutic armamentarium. This slide shows a staggering unmet need to be addressed by this novel treatment. Major depressive disorder is the leading cause of disability worldwide and approximately 1 in 3 patients do not achieve adequate relief using our current SSRIs or SNRIs. This means that there are more than 3 million U.S. adults with TRD. Additionally, of the TRD patients who do respond to these treatments, a full 50% relapse after only 3 months of maintenance treatment. And the suicide rate is sevenfold higher amongst hospitalized TRD patients than in treatment-responsive MDD patients. Finally, our current treatments require 3 to 6 weeks to become effective, way too slow to aid actively suicidal patients. MDD is also known to markedly increase the incidence of a variety of physical illnesses, especially cardiometabolic disorders. And there is an increase, about two to fourfold increased risk of premature death. There's also a 30% increased risk of cancer and cancer patients who are depressed have longer hospitalizations, poor quality of life and higher death rates. Depression also has a major impact on the ability to functional occupationally, especially in our knowledge-based economy. As an example, there are high rates of absenteeism and presentism and those with serious mental illnesses have almost a 6 to 7x higher increased rate of unemployment. So overall, not only are health care costs tremendously increased, but there's also a major economic impact of increased work absence and disability payments. So there's thus a clear and pressing need for better treatment options for TRD. SPRAVATO brought rapid-acting pharmacology to the field, but it has its own limitations. Repeated TMS is widely used and well tolerated, but has moderate remission rates. And electro convulsive therapy, while efficacious, requires the induction of full seizures and has well-documented cognitive and memory side effects. Psychedelics, when approved, may be complex to administer with their long monitoring period. By contrast, Cyclerion-126 offers a potential new therapeutic layer that is hospital-based, highly supervised EEG-guided treatment that builds upon well-understood anesthetics. It has a potential for rapid, durable and reproducible benefits. Cyclerion-126 has the potential to help patients across all stages of depression, but in my opinion, will likely find its niche after SPRAVATO. Now we know that slow wave activity reflects cortical synaptic strength and plasticity. Importantly, both ketamine and esketamine bring about rapid changes in slow wave activity and these slow wave activity increases correlate with antidepressant response at 24 hours. Although the studies shown here are small, 3 completely independent early clinical studies have demonstrated that propofol can produce rapid and meaningful antidepressant effects in TRD. Consistent patterns were seen in each trial. The onset of benefit was within 1 to 2 weeks, durability lasted 3 to 6 months, and there were no major safety concerns, Importantly, achieving a very specific EEG-defined brain state such as slow wave activity or burst suppression is critical for clinical efficacy. And that's one of the key features with Cyclerion-126, being able to measure these EEG-defined states in real time and adjust the dosing accordingly. As you know, these are heterogeneous disorders. So in the future, EEG-based biomarkers and artificial intelligence may also help identify those patients who are predicted to respond best. Cyclerion plans to run the much-needed well-controlled studies and solve the execution challenges that has limited this mechanism's full therapeutic potential. They plan to initiate a multinational 2-part proof-of-concept study in 2026. The goal is to confirm that one can reliably achieve the EEG states associated with antidepressant activity and to translate them into meaningful clinical benefit. Part A is a randomized, double-blind 3-arm study, demonstrating the ability to induce and maintain the target EEG states, namely slow wave activity and burst suppression while characterizing safety, sedation depth and identifying the dose. They will also collect MADRS data to assess early efficacy signals and to optimize the parameters for Part B. Part B uses the same 3-arm double-blind design, but is powered for clinical efficacy as assessed by MADRS score changes and secondary measures of durability, patient-reported outcomes, safety, cognition and the performance of the Sham control. Part B is designed to deliver a definitive antidepressant signal and to identify the EEG signatures to take into Phase III. I think the company has been very thoughtful, methodical and doing things sequentially to establish the mechanistic, clinical and EEG foundation that will be needed for confirmatory trials. You can see on this slide the inclusion and exclusion criteria. They're very similar to what was done for SPRAVATO. Part A will allow Cyclerion to confirm in [ cyclical ] modeling on the induction and the maintenance of the target EEG signatures while characterizing the safety, tolerability and dosing parameters needed for Part B. Cyclerion will also be looking directionally at efficacy in Part B. Part B will evaluate the safety, efficacy and will evaluate durability. Together, Parts A and B will build a cohesive evidence base, namely validating the EEG mechanisms, demonstrating clinical efficacy and generating long-term durability data to inform Phase III. Importantly, things are designed to fit within established facility workflows for existing treatment modalities. So the psychiatrists will write the script and be in the room for the treatment administration while the anesthesiologist will actually administer the treatment. In this model, there are benefits for all the stakeholders. For patients, a 2- to 3-hour procedure with an efficacious treatment with expected fast return to daily activities on the same day as a treatment. For the providers, it should be very easy to administer and for the facilities, the potential for reimbursement for the procedure and the drug with added efficiencies and ability to scale. This slide shows the end-to-end patient and clinic journey. The core message here is simple. High efficacy alone is not enough. Execution will determine widespread adoption. So the journey starts with the patient searching for better treatment and an initial consultation. This stage sets expectations and establishes confidence in the treatment experience. Next is the screening and planning where benefits investigation, prior authorization and treatment scheduling occurs. This can be a major friction point, so strong operational support is essential to prevent drop-off. At the center is site administration and observation. This includes prescribing, product ordering, administration with observation periods and structured monitoring. At the center is the site administration and structural observation. This is where clinics need to be most clinical, operational and have the reimbursement support. As you know, strategy matters. So ideally, they will begin with fewer well-supported sites and then mature and expand as things basically become much more straightforward. Important to emphasize that this is not simply a drug launch. It is a design of a scalable treatment ecosystem, one which may help many, many patients. With that, I'll turn it over to Regina. Regina?

Thank you, Dr. Manji. Now let's dive a bit deeper into CYC-126's product development. Work is underway, and we are making steady and meaningful progress across all components required for the integrated system. Our product development strategy is guided by market research and commercial modeling with the goal of positioning CYC-126 to address a broad treatment-resistant depression population. Across hardware, software and the clinical protocol, we are making coordinated progress that gives us a clear line of sight to a fully integrated system and supports initiation of our Phase II proof-of-concept study in the second half of 2026. The computational control module, the decision-making engine of the system is under active development. We are refining algorithms, defining EEG features linked to our target states and testing performance in simulated environments, including calibration around slow wave activity and burst suppression, robustness across patient scenarios and iterative dose control logic. In parallel, we are developing a TRD-specific therapeutic protocol in close collaboration with anesthesiologists and psychiatrists to ensure alignment with standard hospital workflows and feasibility across sites. Our objective is to integrate the EEG hardware, infusion pumps, control algorithms and clinical protocol into a unified prototype. While integration is still underway, the path is clear and the progress remains on track to support clinical testing. This slide shows the strong progress we're making integrating the key components of CYC-126. On the first row, you will see the brain with the system. On the left is our computational control module. Here, we're integrating proprietary sedation-controlled software and a treatment-resistant depression specific protocol, all built on top of Medsteer's proven platform. This is where our collaboration with Medsteer, which we will discuss in the next slide, accelerates us. The second row is the sensing and delivery hardware. This row covers the EEG monitor and infusion pump. For our devices, for our proof-of-concept study, we are intentionally leveraging FDA-cleared monitors and pumps rather than building hardware from scratch. That strategy is intended to limit hardware and regulatory risk and to keep the program capital efficient. Finally, the third row shows the drug component. The drug row highlights our use of common generic anesthetics. This is fully aligned with our previously disclosed MIT license and allows us to build on extensive existing safety history and clinical data. Altogether, these elements keep us on track to have the full device ready in 2026 ahead of starting our proof-of-concept study. Yesterday's announced collaboration with Medsteer is a critical accelerator for this program. Medsteer brings significant experience in closed-loop anesthesia with proven software technologies, advanced regulation algorithms and clinical data sets accumulated from real-world use across thousands of procedures globally. Their platform has a significant published base and is backed by 25 clinical studies and more than 9,000 patient inclusions with broad research use in the hospital setting. Collaboration with Medsteer gives us a substantial technical advantage in CYC-126's development. Through this collaboration, Cyclerion intends to incorporate the following into CYC-126's development. Extensive clinical databases with granular patient information, including EEG data sets that inform algorithm calibration fit for our purpose, patents, know-how and software not all available commercially and engineering support that is intended to shorten development time lines. Importantly, we retain the exclusive option to license certain Medsteer technology, patent rights, know-how and software into Cyclerion's field of use. Importantly, Cyclerion's field extends within and well beyond neuropsychiatric diseases such as treatment-resistant depression and excludes use in major surgery, general or multi-bed intensive care units and medical transport. We believe our relationship with Medsteer reduces program risk, accelerates time lines and positions Cyclerion with a first-mover advantage in anesthetic brain state modulation. Now let's discuss more detail on CYC-126's regulatory strategy. We have spent extensive time honing our regulatory strategy to maximize speed and ensure global alignment. We are pursuing a dual country approach. In Australia, the TGA allows an expedited start for our Phase II proof-of-concept study in an efficient and high-quality environment that is well suited for early clinical studies. This path makes it possible for us to begin generating clinical data earlier than it would be possible in the United States alone. In the United States, we continue active engagement with the FDA. Our program is treated as a drug-led combination product, which allows us to anchor the submission around the pharmacologic requirements while integrating the device into the development program. The FDA has communicated that we will receive pre-IND feedback in early 2026 to finalize expectations around study design, safety monitoring, CMC and device integration. This multinational strategy gives us multiple regulatory touch points, derisks execution and ensures that we build the evidence package needed to support global registration. Now we will provide a brief financial update. As of September 30, 2025, our cash balance was roughly $4.6 million. We are operating with a very lean disciplined cost structure, funding only essential development work and deferring noncore spend until after proof of concept. This allows us to stretch our capital and stay flexible in, when and how we raise additional funding. This structure has allowed us to monetize legacy assets, focus entirely on CYC-126 and materially reduce ongoing IP and development costs. As a reminder, we licensed praliciguat to Akebia in 2021, retaining meaningful upside while transferring development responsibility. Akebia recently initiated a Phase II study, which provides an expected $1 million milestone for Cyclerion paid upon first patient dosed. Looking ahead, we estimate needing approximately $20 million to reach initial clinical readouts from Part A and approximately $50 million to complete the full proof-of-concept study. With our lean cost base and milestone-driven financing strategy, we believe we can generate proof-of-concept data in a capital-efficient, derisked manner that offers investors clear visibility into major value inflection. We will now discuss the anticipated time lines and milestones associated with generating proof-of-concept data for CYC-126. We believe our development road map is clear and anchored to achievable milestones. In 2025, we made significant progress across key program foundations, including preparation of the FDA pre-IND package, finalization of the full proof-of-concept study design, selection of prototype components for CYC-126 and definition of our regulatory and CMC strategy. We also completed our initial market analysis and commercial model. In 2026, we anticipate receiving pre-IND feedback in Q1, completing the Australian CTN process following HREC approval and initiating the Phase II proof-of-concept study for CYC-126 in Australia in the second half of the year. In 2027, we expect to generate Phase II Part A safety and pharmacodynamic data. By the end of 2028, we aim to deliver full proof-of-concept results, prepare for our end of Phase II FDA meeting and advance our planning for pivotal studies. Throughout this period, we also see opportunities to expand the pipeline and unlock potential nondilutive capital from our historical portfolio. The intent of each of these milestones is to build value, reduce risks and bring us closer to delivering a new treatment layer for treatment-resistant depression. Let me close by bringing this back to the patient. CYC-126 is being built to serve a broad population of patients with treatment-resistant depression, including those who continue to struggle despite access to current approved products. Cyclerion is pairing well-understood anesthetics with real-time EEG in a hospital-based procedure designed to be precise, reproducible and durable. And we're doing it with capital efficiency, a clear Phase II plan and a direct line of sight to pivotal development. Thank you for your time, your attention and your interest in Cyclerion as we advance CYC-126 toward clinical proof of concept and ultimately, towards the patients who urgently need better options.