Cyclerion Therapeutics (CYCN) 10-Q 4 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 01, 2020
Document and Entity Information
Entity Registrant Name	CYCLERION THERAPEUTICS, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,754,894
Entity Central Index Key	0001755237
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 67,096	$ 94,895
Related party accounts receivable	1,026	1,474
Prepaid expenses	1,868	1,966
Other current assets	136	2,862
Total current assets	70,126	101,197
Restricted cash	4,991	4,991
Property and equipment, net	11,600	11,613
Operating lease right-of-use asset	52,254	68,137
Other assets	1,059	540
Total assets	140,030	186,478
Current liabilities:
Accounts payable	1,463	3,230
Related party accounts payable	59	81
Accrued research and development costs	2,682	2,198
Accrued expenses and other current liabilities	4,563	9,320
Current portion of operating lease liabilities	2,668	3,420
Total current liabilities	11,435	18,249
Operating lease liabilities, net of current portion	47,055	70,500
Commitments and contingencies
Stockholders' equity
Common stock, no par value, 400,000,000 shares authorized and 27,754,894 issued and outstanding at March 31, 2020 and 400,000,000 shares authorized and 27,598,133 issued and outstanding at December 31, 2019
Accumulated deficit	(105,855)	(85,627)
Paid-in capital	187,413	183,376
Accumulated other comprehensive loss	(18)	(20)
Total stockholders' equity	81,540	97,729
Total liabilities and stockholders' equity	$ 140,030	$ 186,478

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Condensed Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	27,754,894	27,598,133
Common stock, shares outstanding	27,754,894	27,598,133

Condensed Consolidated and Comb

Condensed Consolidated and Combined Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Condensed Consolidated and Combined Statements of Operations and Comprehensive Loss
Revenue from related party	$ 1,014
Cost and expenses:
Research and development	16,825	$ 26,404
General and administrative	6,891	10,977
Gain on lease modification	(2,113)
Total cost and expenses	21,603	37,381
Loss from operations	(20,589)	(37,381)
Interest and other income	361
Net loss	$ (20,228)	$ (37,381)
Net loss per share:
Basic and diluted net loss per share (in dollars per share)	$ (0.73)	$ (1.37)
Weighted average shares used in calculating:
Basic and diluted net loss per share (in shares)	27,669	27,380
Other comprehensive loss:
Net loss	$ (20,228)	$ (37,381)
Other comprehensive loss:
Foreign currency translation adjustment	2
Total other comprehensive loss	2
Comprehensive loss	$ (20,226)	$ (37,381)

Condensed Consolidated and Co_2

Condensed Consolidated and Combined Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common stock	Net Parent Investment	Paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Total
Beginning balance at Dec. 31, 2018	$ 0	$ (10,445)	$ 0	$ 0	$ 0	$ (10,445)
Beginning balance (in shares) at Dec. 31, 2018	0
Change in Stockholders' Equity (Deficit)
Net loss		(37,381)				(37,381)
Net transfers from Ironwood		36,085				36,085
Ironwood allocation - share-based compensation		3,989				3,989
Ending balance at Mar. 31, 2019	$ 0	(7,752)	0	0	0	$ (7,752)
Ending balance (in shares) at Mar. 31, 2019	0					0
Beginning balance at Dec. 31, 2019	$ 0	0	183,376	(85,627)	(20)	$ 97,729
Beginning balance (in shares) at Dec. 31, 2019	27,598,133					27,598,133
Change in Stockholders' Equity (Deficit)
Net loss				(20,228)		$ (20,228)
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan			1			1
Issuance of common stock upon exercise of stock options, RSUs and employee stock purchase plan (in shares)	156,761
Share-based compensation expense related to issuance of stock options and RSUs to employees and employee stock purchase plan			4,036			4,036
Foreign currency translation adjustment					2	2
Ending balance at Mar. 31, 2020	$ 0	$ 0	$ 187,413	$ (105,855)	$ (18)	$ 81,540
Ending balance (in shares) at Mar. 31, 2020	27,754,894					27,754,894

Condensed Consolidated and Co_3

Condensed Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (20,228)	$ (37,381)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization	626	525
Gain on disposal of property and equipment	(41)
Gain on lease modification	(2,113)
Share-based compensation expense	4,036	3,989
Changes in operating assets and liabilities:
Related party accounts receivable	448
Prepaid expenses	98	(60)
Other current assets	(9)
Operating lease assets	(5,502)
Other assets	(519)	6
Accounts payable	(1,026)	2,890
Related party accounts payable	(22)
Accrued research and development costs	484	982
Operating lease liabilities	(699)
Accrued expenses and other current liabilities	(4,713)	(5,274)
Other liabilities		52
Net cash (used in) operating activities	(29,180)	(34,271)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,405)	(1,814)
Proceeds from sale of property and equipment	49
Net cash (used in) investing activities	(1,356)	(1,814)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options and ESPP	1
Transfers from Ironwood		36,085
Net cash provided by financing activities	1	36,085
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2	0
Net decrease in cash, cash equivalents and restricted cash	(30,533)	0
Cash, cash equivalents and restricted cash, beginning of period	102,620	0
Cash, cash equivalents and restricted cash, end of period	72,087
Supplemental cash flow disclosure:
Cash paid for initial direct costs of lease modification	6,507
Non-cash investing activities
Fixed asset purchases in accounts payable and accrued expenses	$ 39	$ 1,029

Condensed Consolidated and Co_4

Condensed Consolidated and Combined Statements of Cash Flows (Parenthetical) $ in Thousands	Mar. 31, 2020USD ($)
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated and combined balance sheets
Cash and cash equivalents	$ 67,096
Restricted cash	4,991
Total cash, cash equivalents and restricted cash	$ 72,087

Nature of Business

Nature of Business	3 Months Ended
	Mar. 31, 2020
Nature of Business
Nature of Business	1. Nature of Business Nature of Operations Cyclerion Therapeutics, Inc. (“Cyclerion” or the “Company”) is a clinical‑stage biopharmaceutical company harnessing the power of soluble guanylate cyclase (“sGC”) pharmacology to discover, develop and commercialize breakthrough treatments for serious and orphan diseases. Cyclerion’s focus is enabling the full therapeutic potential of next‑generation sGC stimulators. The Company’s strategy rests on a solid scientific foundation that is enabled by our people and capabilities, external collaborations, and a responsive capital allocation approach. Cyclerion GmbH, a wholly owned subsidiary, was incorporated in Zug, Switzerland on May 3, 2019. Cyclerion GmbH is an operational entity with one employee who is the Company's Chief Innovation Officer. The functional currency is the Swiss franc. The Separation On April 1, 2019, Ironwood Pharmaceuticals, Inc. (“Ironwood”) completed the previously announced separation of its sGC business, and certain other assets and liabilities, into a separate, independent publicly traded company by way of a pro-rata distribution of all of the outstanding shares of common stock of Cyclerion Therapeutics, Inc. through a dividend distribution of one share of the Company’s common stock, with no par value per share, for every 10 shares of Ironwood common stock held by Ironwood stockholders as of the close of business on March 19, 2019, the record date for the Distribution (the entire transaction being the “Separation”). As a result of the Separation, the Company became an independent public company and commenced trading under the symbol “CYCN” on the Nasdaq Global Select Market on April 2, 2019. In connection with the Separation, on March 30, 2019, the Company entered into certain agreements with Ironwood to provide a framework for the Company’s relationship with Ironwood following the Separation, including, among others, the Separation Agreement, Tax Matters Agreement, and Employee Matters Agreement ("EMA"). In addition, in connection with the Separation, on April 1, 2019, the Company entered into a Development Agreement, an Ironwood Transition Services Agreement, a Cyclerion Transition Services Agreement and an Intellectual Property License Agreement with Ironwood. On April 2, 2019, the Company issued 11,817,165 shares in a private placement (the “Private Placement”) of common stock to accredited investors for gross proceeds of $175 million (net proceeds of approximately $165 million). Basis of Presentation The Company did not operate as a separate, stand-alone entity for the prior interim period covered by the interim condensed consolidated and combined financial statements. The Company’s condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, condensed consolidated and combined statements of operations and comprehensive loss and statements of cash flows for the three months ended March 31, 2020 consist of the condensed consolidated balances and activity of Cyclerion as prepared on a stand-alone basis. The Company’s condensed consolidated and combined statements of operations and comprehensive loss and statements of cash flows for the three months ended March 31, 2019 have been prepared on a “carve out” basis. The unaudited condensed consolidated and combined financial statements reflect the historical results of the operations, financial position and cash flows of Cyclerion, in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The accompanying unaudited condensed consolidated and combined financial statements reflect the condensed consolidated and combined financial position and condensed consolidated and combined results of operations of the Company as an independent, publicly-traded company for the period after the Separation on April 1, 2019. The unaudited condensed consolidated and combined financial statements also reflect the financial position and results of operations of the Company as a combined reporting entity of Ironwood for periods prior to the Separation. For periods prior to the Separation, the unaudited condensed consolidated and combined financial statements of Cyclerion reflect the assets, liabilities, and expenses directly attributable to Cyclerion, as well as allocations of certain corporate level expenses, deemed necessary to fairly present the results of operations and cash flows of Cyclerion, as discussed further below. As such, these allocations may not be indicative of the actual amounts that would have been recorded had Cyclerion operated as an independent, publicly traded company for the years presented. Prior to the Separation, Cyclerion was dependent upon Ironwood for all of its working capital and financing requirements, as Ironwood used a centralized approach to cash management and financing its operations. There were no cash amounts specifically attributable to Cyclerion for the historical periods presented; therefore, there is no cash reflected for historical periods in the condensed consolidated and combined financial statements. Accordingly, cash and cash equivalents, debt or related interest expense have not been allocated to Cyclerion in the historical financial statements. Financing transactions related to Cyclerion are accounted for as a component of net parent investment in the historical combined balance sheets and as a financing activity on the accompanying combined statements of cash flows. Prior to the Separation, Cyclerion’s combined financial statements included an allocation of expenses related to certain Ironwood corporate functions, including senior management, legal, human resources, finance, information technology and quality assurance. These expenses were allocated to Cyclerion based on direct usage or benefit where identifiable, with the remainder allocated pro-rata based on project related costs, headcount or other measures. These allocations may not be indicative of the actual expense that would have been incurred had Cyclerion operated as an independent, publicly traded company for the periods presented. Prior to the Separation, the combined balance sheets of Cyclerion included assets and liabilities that were allocated principally on a specific identification basis and net parent investment was shown in lieu of stockholders’ equity. As a result of the Separation, the Company’s net parent investment balance was reclassified to paid-in capital. Going Concern At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company's plans or when its plans alleviate substantial doubt about the Company's ability to continue as a going concern. The Company has experienced negative operating cash flows for all historical periods presented. The Company expects these losses to continue into the foreseeable future as the Company continues the development and clinical testing of the product candidates, olinciguat and IW-6463, and its discovery research programs. On April 2, 2019, the Company received gross proceeds of $175 million (net proceeds of approximately $165 million) from the Private Placement. After considering the Company’s current research and development plans and the timing expectations related to the progress of its programs, and after considering its existing cash and cash equivalents as of March 31, 2020, the Company did not identify conditions or events that would raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these financial statements were issued.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies The accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies to the consolidated and combined financial statements contained in the Company’s 2019 annual report on Form 10-K. The Company includes herein certain updates to those policies. Leases The Company has a property lease for its headquarters location at 301 Binney Street, Cambridge, MA (the “Master Lease”). The Company determines if an arrangement is a lease at the inception of the contract. The asset component of the Company’s operating leases is recorded as operating lease right-of-use (“ROU”) assets, and the liability component is recorded as current portion of operating lease liabilities and operating lease liabilities, net of current portion, in the Company’s consolidated balance sheets. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. The Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments if an implicit rate of return is not provided with the lease contract. Operating lease right-of-use assets are adjusted for incentives received. Lease cost is recognized on a straight-line basis over the lease term, and includes amounts related to short-term leases. Variable lease costs that do not depend on an index or rate are recognized as incurred. ROU assets and operating lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification. The difference between the remeasured ROU assets and the operating lease liabilities are recognized as a gain or loss in operating expenses. The Company reviews any changes to its lease agreements for potential modifications and/or indicators of impairment of the respective ROU asset. On October 18, 2019, the Company entered into an agreement to sublease 15,700 rentable square feet of its Master Lease to a subtenant. Sublease income is recognized on straight-line basis over the term of the sublease agreement and is recorded net of the related rent expense from the Master Lease within interest and other income in the condensed consolidated and combined statements of operations and comprehensive loss. In sublease agreements that contain non-monetary consideration, the Company estimates the fair market value of the non-monetary consideration received using market data and recognizes it on a straight-line basis over the sublease term. Variable lease consideration that does not depend on an index or rate is allocated to a non-lease component and is recognized over time in accordance with the pattern of transfer. No modification or impairment was deemed to have occurred by entering into the sublease agreement because the Company was not released, either fully or in part, from its obligations under the Master Lease. See Note 8, Leases . On February 28, 2020 the Company entered into an amendment to our Master Lease at 301 Binney Street in Cambridge, Massachusetts (the “Lease Amendment”). The Lease Amendment provided for the partial termination of the Company's rights and obligations with respect to a portion of the leased premises of approximately 40,000 rentable square feet. The Company will continue to lease approximately 74,000 rentable square feet under terms of the amended lease. The Lease Amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. As such, the ROU assets and operating lease liabilities were remeasured using an incremental borrowing rate at the date of modification and the Company recorded a gain of approximately $2.1 million as a component of operating expenses. No impairment of the ROU asset was deemed to have occurred. See Note 8, Leases . New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Except as discussed elsewhere in the notes to the condensed consolidated and combined financial statements, the Company did not adopt any new accounting pronouncements during the three months ended March 31, 2020 that had a material effect on its condensed consolidated and combined financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will change how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”) to provide additional guidance on the adoption of ASU 2016-13, ASU No. 2019-10, Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”), ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses (“ASU 2019-11”) and ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)("ASU 2020-02"). ASU 2019-04 added Topic 326, Financial Instruments—Credit Losses, and made several amendments to the codification and also modified the accounting for available-for-sale debt securities. ASU 2019-05 provides targeted transition relief by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. ASU 2019-10 aligned the effective dates of certain major updates not yet effective to conform to the FASB’s new philosophy of staggering major updates between large public companies and all other entities. ASU 2019-11’s major provisions included additional clarifications and practical expedients related to expected recoveries for purchased assets with credit deterioration, troubled debt restructuring, accrued interest receivables, and other areas when adopting ASU 2016-13. ASU 2020-02 provided amendments to the Topic 326 including a new section related to credit losses measured at amortized cost and a clarification to Topic 842 and is effective when adopting other areas of Financial Instruments-Credit Losses Topic 326. As a public business entity that qualifies as a smaller reporting company, ASU 2016-13, ASU 2019-04 and ASU 2019-05 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of these ASUs will have on the Company’s financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ASU 2018-13”): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurement (“ASU 2018-13”) which amends the disclosure requirements for fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-13 in the first quarter of 2020 and the adoption of this standard did not have a material impact on the Company’s financial position or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal Use Software (ASC 350-40), to determine which implementation costs to capitalize as assets or expense as incurred. The internal-use software guidance in ASC 350-40 requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. A customer’s accounting for the hosting component of the arrangement is not affected by this guidance. The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-15 in the first quarter of 2020 and the adoption of this standard did not have a material impact on the Company’s financial position or results of operations. No other accounting standards known by the Company to be applicable to it that have been issued by the FASB or other standard-setting bodies and that do not require adoption until a future date are expected to have a material impact on the Company’s condensed consolidated and combined financial statements upon adoption.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2020
Related Party Transactions
Related Party Transactions	3. Related Party Transactions Relationship with Ironwood Prior to April 1, 2019, the Company was managed and operated in the normal course of business under Ironwood. Ironwood became a related party when Mark Currie, Ironwood’s former Chief Scientific Officer and the Company’s President, joined Ironwood’s board in April 2019 following the Separation. Certain shared costs were allocated to the Company and reflected as expenses in the Company’s stand-alone combined financial statements for periods prior to the Separation. The expenses reflected in the condensed combined financial statements for periods prior to the Separation may not be indicative of expenses that will be incurred by the Company in the future. (a) Corporate costs Ironwood incurred significant corporate costs for services provided to Cyclerion. These costs included expenses for information systems, accounting, other financial services (such as treasury, audit and purchasing), human resources, legal, facilities and Separation-related costs. A portion of these costs benefited Cyclerion and have been allocated to Cyclerion using a pro‑rata method based on project related costs, headcount, or other measures that management believes are consistent and reasonable. This methodology is applied consistently between periods, however the magnitude of the allocation will vary based on the relationship of Cyclerion costs compared to those of Ironwood’s other operations. The corporate costs allocated to Cyclerion, prior to the Separation, and included in the combined statements of operations was approximately $6.8 million for the three months ended March 31, 2019 and was included in general and administrative expenses. (b) Cash Management and Financing Cyclerion participated in Ironwood’s centralized cash management and financing programs prior to the Separation. Disbursements were made through centralized accounts payable systems operated by Ironwood. Cash receipts were transferred to centralized accounts, also maintained by Ironwood. As cash is disbursed and received by Ironwood, it was accounted for by Cyclerion through net parent investment. All obligations were financed by Ironwood and financing decisions were determined by central Ironwood treasury operations until the Separation. Other Transactions with Ironwood As part of the Separation from Ironwood, the Company entered into Transition Services Agreements and a Development Agreement with Ironwood. Under the Transition Services Agreements, the Company provides certain services to Ironwood, and Ironwood provides certain services to the Company, each related to corporate functions such as finance, procurement, facilities and development for a period of up to two years from the date of the Separation, unless earlier terminated or extended by mutual agreement. These services are charged to and from Ironwood and are recorded as part of operating expenses. The net charge to operating expenses for the Transition Services Agreements was de minimis for the three months ended March 31, 2020. All services provided to and from the Company under the Transition Services Agreements were completed as of March 31, 2020 and the agreements were terminated. Under the Development Agreement, the Company provides certain research and development services to Ironwood at mutually agreed upon rates and the amounts earned are recorded as revenue from related party. Such research and development activities are governed by a joint steering committee composed of representatives of both Ironwood and the Company. The Company recorded approximately $1.0 million in revenue from related party for services provided under the Development Agreement for the three months ended March 31, 2020. In accordance with the Separation Agreement, there were certain other transactions and adjustments post-Separation between the Company and Ironwood. The total amount due from Ironwood at March 31, 2020 and December 31, 2019 was approximately $1.0 million and $1.5 million, respectively, primarily from the Development Agreement, and is reflected as related party accounts receivable. The total amount due to Ironwood was de minimis at March 31, 2020 and approximately $0.1 million at December 31, 2019. Peter Hecht, Ironwood’s former Chief Executive Officer and the Chief Executive Officer and board member of Cyclerion, donated 2.5 million of his shares of Ironwood common stock to American Endowment Foundation for the creation of a donor advised fund that divested these shares to invest $34.0 million in Cyclerion as part of the financing transaction completed by Cyclerion on April 2, 2019. Mark Currie has invested $4.0 million in Cyclerion as part of this financing. Dr. Currie and certain other investors have funded a portion of their investment through sales of Ironwood common stock. Other Related Party Transactions During the three months ended March 31, 2020, the Company paid approximately $0.1 million to a related party which it engaged to provide research and development transaction support services. The entity became a related party when Mark Currie, the Company’s President, joined its board in January 2020. There was a de minimis amount due to the related party at March 31, 2020 and December 31, 2019.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2020
Fair Value of Financial Instruments
Fair Value of Financial Instruments	4. Fair Value of Financial Instruments The Company’s cash equivalents are generally classified within Level 1 of the fair value hierarchy. The following tables presents information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values as of March 31, 2020 and December 31, 2019 (in thousands): Fair Value Measurements as of March 31, 2020 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 66,167 $ — $ — $ 66,167 Cash equivalents $ 66,167 $ — $ — $ 66,167 Fair Value Measurements as of December 31, 2019 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 93,859 $ — $ — $ 93,859 Cash equivalents $ 93,859 $ — $ — $ 93,859

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2020
Property and Equipment
Property and Equipment	5. Property and Equipment Property and equipment, net consisted of the following (in thousands): March 31, December 31, 2020 2019 Laboratory equipment $ 13,335 $ 14,505 Software 2,232 2,232 Construction in progress 11 915 Computer and office equipment 1,547 1,890 Leasehold improvements 15,194 13,673 Property and equipment, gross 32,319 33,215 Less: accumulated depreciation and amortization (20,719) (21,602) Property and equipment, net $ 11,600 $ 11,613 As of March 31, 2020, and December 31, 2019, the Company’s property and equipment was primarily located in Cambridge, Massachusetts. Depreciation and amortization expense of the Company’s property and equipment was approximately 0.6 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively. The Company recorded a gain on disposal of property and equipment of less than $0.1 million for the three months ended March 31, 2020 recognized within operating expenses in the condensed consolidated and combined statements of operations and comprehensive loss. Leasehold improvements of $1.5 million were put into service in the three months ended March 31, 2020, of which $0.9 million was included in construction in progress as of December 31, 2019.

Accrued Expenses and Other Curr

Accrued Expenses and Other Current Liabilities	3 Months Ended
	Mar. 31, 2020
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities	6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31, 2020 2019 Accrued incentive compensation $ 967 $ 3,767 Salaries 981 1,730 Accrued vacation 899 969 Professional fees 313 441 Accrued severance and benefit costs 676 2,009 Other 727 404 Accrued expenses and other current liabilities $ 4,563 $ 9,320

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Commitments and Contingencies	7 . Commitments and Contingencies Other Funding Commitments As of March 31, 2020 and December 31, 2019, the Company had several on-going studies in various clinical trial stages. The Company’s most significant clinical trial expenditures are related to contract research organizations. These contracts are generally cancellable, with notice, at the Company’s option and do not have any significant cancellation penalties. Guarantees On September 6, 2018, Cyclerion was incorporated in Massachusetts and its officers and directors are indemnified for certain events or occurrences while they are serving in such capacity. Prior to the Separation, the Company’s officers and directors were similarly indemnified under Delaware law. The Company enters into certain agreements with other parties in the ordinary course of business that contain indemnification provisions. These typically include agreements with directors and officers, business partners, contractors, clinical sites and customers. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities. These indemnification provisions generally survive termination of the underlying agreements. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. However, to date the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of these obligations is minimal. Accordingly, the Company did not have any liabilities recorded for these obligations as of March 31, 2020 and December 31, 2019.

Leases

Leases	3 Months Ended
	Mar. 31, 2020
Leases
Leases	8. Leases The FASB issued ASU 2016-02, or the leasing standard or ASC 842, in February 2016. ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 also requires certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. On April 1, 2019, the Company entered into the Master Lease, a direct operating lease for its existing premises located at 301 Binney Street, Cambridge, MA consisting of approximately 114,000 rentable square feet of office and lab space on the first and second floors. The Master Lease is for a term of 123 months with two five-year extension options and certain expansion rights. The Master Lease includes a letter of credit, initially in the amount of $7.7 million, posted with the landlord as a security deposit, which is collateralized by a money market account recorded as restricted cash on the Company’s condensed consolidated balance sheets. Cyclerion has also entered into customary non-disturbance arrangements with the building landlord’s mortgagee and with the property ground lessor recognizing Cyclerion’s leasehold interest in this property. The Master Lease provides for annual base rent of approximately $11.0 million in the first year, which increases on a yearly basis by 3.0% (subject to an abatement of base rent of approximately $2.7 million in the first year of the lease). The Company is obligated to pay the landlord for certain costs, taxes and operating expenses related to the premises, subject to certain exclusions; however, the Company has concluded that these payments are not in-substance fixed payments and therefore are not included in the calculation of the related lease liability and asset under ASC 842. Additionally, the Company has made the policy election to adopt the practical expedient to not separate lease components from non-lease components for the right-to-use asset class of office and laboratory space. This policy election results in the Company accounting for the lease component, the use of the premises, and the non-lease components, which include a property management fee, as a single lease component. The Company recorded the liability associated with the Master Lease at the present value of the lease payments not yet paid, discounted using the discount rate for the Master Lease established at the commencement date. As the Master Lease does not provide an implicit rate, the Company had to estimate the incremental borrowing rate, or IBR, as of the commencement date. The IBR is defined under ASC 842 as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company determined its IBR to be 10.9% at the time of the agreement, which was used to discount the remaining lease payments over the remaining lease term and recorded a lease liability of $71.3 million on April 1, 2019. This lease liability will be amortized over the remaining lease term in an amount equal to the difference between the cash rent paid and the monthly interest calculated on the remaining lease liability. The Company had a tenant improvement allowance from the landlord of approximately $2.3 million for certain permitted costs related to the buildout of the premises. The Company is deemed to be the owner of these tenant improvements during the lease term. These $2.3 million of improvements are included in the Company’s property, plant and equipment balances in its consolidated balance sheets as of March 31, 2020 and December 31, 2019 and are depreciated over the shorter of their useful life or the related lease term. The Company received the payment for the tenant allowance in the third quarter of 2019. On April 1, 2019, the Company recorded a right-of-use asset in the amount $71.3 million. The right-of-use asset is being amortized over the remaining lease term in an amount equal to the difference between the calculated straight-line expense of the total lease payments less the monthly interest calculated on the remaining lease liability. On February 28, 2020 the Company entered into an amendment to our Master Lease at 301 Binney Street in Cambridge, Massachusetts. The Lease Amendment provides for the partial termination of the Company’s rights and obligations with respect to a portion of the leased premises of approximately 40,000 rentable square feet. The Company will continue to lease approximately 74,000 square feet including the area covered by the subleased premise, discussed below. The Company reduced its remaining lease payments through June 2029 by approximately $41.9 million. In connection with the Lease Amendment, the Company paid $6.3 million for a termination fee and $0.2 million for other initial direct costs, which will be deferred and recognized over the remaining lease term. The Company’s security deposit was reduced by approximately $2.7 million to approximately $5.0 million, which is classified as restricted cash on the Company’s condensed consolidated balance sheet as of March 31, 2020. The Lease Amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. As such, the ROU assets and operating lease liabilities were remeasured using an incremental borrowing rate at the date of modification of 9.7%, which resulted in a reduction of the ROU asset of $21.4 million and a reduction in the operating lease liabilities of $23.5 million. The Company recorded the resulting gain of approximately $2.1 million as a component of operating expenses in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2020. The Company recorded an operating lease right-of-use asset of approximately $52.3 million and $68.1 million related to the amended Master Lease in its condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. The Company recorded current operating lease liabilities of approximately $2.7 million and $3.4 million, and noncurrent operating lease liabilities of approximately $47.1 million and $70.5 million, related to the amended Master Lease in its condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. Lease cost is recognized on a straight-line basis over the lease term. For the three months ended March 31, 2020, the Company recognized a total of approximately $2.7 million of total lease costs. Variable lease costs not subject to an index or rate are recognized as incurred. For the three months ended March 31, 2020, the Company recognized a total of approximately $1.0 million of variable lease costs related to the Master Lease, as amended. Supplemental cash flow information related to leases for the three months ended March 31, 2020 is as follows: Decrease in right-of-use assets related to lease modification $ 21,386 Decrease in operating lease liabilities due to lease modification $ 23,499 Cash paid for amounts included in the measurement of lease liabilities (in thousands) $ 2,421 Weighted-average remaining lease term of operating leases (in years) Weighted-average discount rate of operating leases 9.7 % On March 31, 2019, the Company entered into a short-term sublease of approximately 24,000 rentable square feet with Ironwood to provide temporary working space for a portion of its workforce while the buildout of the Company’s new premises was being completed. The sublease was for an initial one-month term with several one-month extension options. The Company subleased the space for approximately 1.5 months, vacating the space and terminating the sublease in mid-May 2019. The Company did not incur any rent expense related to the sublease for the three months ended March 31, 2020 and 2019. On October 18, 2019, the Company entered into an agreement with a third party to sublease 15,700 rentable square feet of its current lease premises under the Master Lease. The sublease will expire on June 30, 2029, unless earlier terminated in accordance with the sublease agreement, and has no extension options. The sublease provides for annual base rent of approximately $1.5 million in the first year, which increases on a yearly basis by 3.0% (subject to an abatement of base rent of approximately $0.7 million for the first six months of the sublease). The sublessee is responsible for its pro rata share of certain costs, taxes and operating expenses related to the subleased space, the consideration for which is variable and is based on the actual operating costs of the lessor. The variable consideration relates exclusively to non-lease components representing such services and will be recognized as incurred. The sublease includes an initial security deposit of $0.5 million, which was provided by the sublessee in the form of a letter of credit, and an additional security deposit of $0.4 million within nine months of the sublease commencement. As part of the consideration for the sublease, the sublessee will provide licensed rooms within the sublease premises and licensed services to the Company over the sublease term free of charge. The licensed rooms have been excluded from the measurement of the sublease as control of the rooms reverts to the Company. The Company expects to receive the benefit of the licensed rooms and services beginning in late 2020. The Company estimated the fair value of the services to be approximately $4.2 million, which will be recorded on a gross basis as the services are received as a component of research and development costs in the condensed consolidated and combined statements of operations and comprehensive loss. The Company allocated the consideration in the sublease agreement between the lease and non-lease components based on their relative standalone prices. For the three months ended March 31, 2020, gross sublease income of $0.5 million was recorded. Net sublease income of approximately $0.1 million was recorded in interest and other income in the condensed consolidated and combined statements of operations and comprehensive loss for the three months ended March 31, 2020. Future minimum lease payments under non-cancelable operating leases under ASC 842 as well as the total future minimum lease payments to be received under the sublease agreement as of March 31, 2020 are as follows: Operating Sublease Lease Payments to Payments be Received 2020 (remaining nine months) $ 5,484 $ (998) 2021 7,469 (1,636) 2022 7,686 (1,683) 2023 7,909 (1,733) 2024 8,139 (1,783) 2025 and thereafter 39,658 (8,694) Total future minimum lease payments (receipts) 76,345 $ (16,527) Less: present value adjustment 26,622 Operating lease liabilities at March 31, 2020 49,723 Less: current portion of operating lease liabilities 2,668 Operating lease liabilities, net of current portion $ 47,055

Share-based Compensation Plans

Share-based Compensation Plans	3 Months Ended
	Mar. 31, 2020
Share-based Compensation Plans
Share-based Compensation Plans	9. Share‑based Compensation Plans Prior to the Separation, share-based compensation expense was allocated to Cyclerion using a combined specific identification and pro-rata method based on internal project related costs and headcount that management believed were consistent and reasonable. In connection with the Separation, Cyclerion adopted its own share-based compensation plans. Specifically, Cyclerion adopted the 2019 Employee Stock Purchase Plan (“2019 ESPP”) and the 2019 Equity Incentive Plan (“2019 Equity Plan”). Under the 2019 ESPP, eligible employees may use payroll deductions to purchase shares of stock in offerings under the plan, and thereby acquire an interest in the future of the Company. Under the 2019 Equity Plan, new post-Separation awards, including stock options and restricted stock units (“RSUs”), may be granted to employees of the Company. Cyclerion also mirrored two of Ironwood’s existing plans, the Amended and Restated 2005 Stock Incentive Plan (“2005 Equity Plan”) and the Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan (“2010 Equity Plan). These mirror plans were adopted to facilitate the exchange of Ironwood equity awards for Cyclerion equity awards upon the Separation as part of the equity conversion. As a result of the Separation and in accordance with the EMA, employees of both companies retained their existing Ironwood vested options and received a pro-rata share of Cyclerion options, regardless of which company employed them post-Separation. For employees that were ultimately employed by Cyclerion, unvested Ironwood options and RSUs were converted to unvested Cyclerion options and RSUs. The conversion of equity awards resulting from the Separation impacted approximately 143 employees and was treated as a Type 1 modification under ASC Topic 718, Share Based Payments, as the awards are expected to vest under the original terms. Incremental compensation expense was measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms were modified. The fair value of RSUs and restricted stock awards was measured using the fair value stock price immediately before and immediately after the modification date which resulted in no incremental compensation expense. The fair value of stock options was measured using the Black-Scholes option pricing method using the appropriate valuation assumptions immediately before and immediately after the modification date. As a result of the modification, Cyclerion recognized a one-time incremental expense of approximately $0.3 million for the vested stock options and will recognize an incremental expense of approximately $7.5 million for the unvested stock options over their remaining vesting period. The following table provides share-based compensation reflected in the Company’s condensed consolidated and combined statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended March 31, 2020 2019 Research and development $ 1,921 $ 1,796 General and administrative 2,115 2,193 $ 4,036 $ 3,989 For the three months ended March 31, 2020, the Company granted stock options to purchase an aggregate of 165,846 shares, at weighted average grant date fair values per option share of $1.71. As of March 31, 2020, the unrecognized share-based compensation expense, net of estimated forfeitures, related to all unvested time-based stock options held by Cyclerion’s employees is $22.2 million and the weighted average period over which that expense is expected to be recognized is 2.8 years. As of March 31, 2020, the unrecognized share-based compensation expense related to stock options containing market conditions held by Cyclerion’s employees is $0.4 million, which is expected to be recognized over a weighted-average period of 4.1 years. As of March 31, 2020, the unrecognized share-based compensation expense, net of estimated forfeitures, related to all unvested RSUs held by the Company’s employees is $5.3 million and the weighted-average period over which that expense is expected to be recognized is 2.5 years.

Loss per share

Loss per share	3 Months Ended
	Mar. 31, 2020
Loss per share
Loss per share	10. Loss per share Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period as follows: Three Months Ended March 31, 2020 2019 Numerator: Net loss (in thousands) $ (20,228) $ (37,381) Denominator: Weighted average shares used in calculating net loss per share - basic and diluted (in thousands) 27,669 27,380 Net loss per share - basic and diluted $ (0.73) $ (1.37) For the three months ended March 31, 2020, 7,936,087 shares of common stock related to stock options and 499,644 shares of common stock related to RSUs were excluded from the calculation of diluted net loss per share since the inclusion of such shares would be anti-dilutive. Prior to April 1, 2019, there were no Cyclerion shares outstanding, as such, the shares outstanding immediately after the distribution and the Private Placement were used to calculate the basic and diluted net loss per share for the three months ended March 31, 2019.

Defined Contribution Plan

Defined Contribution Plan	3 Months Ended
	Mar. 31, 2020
Defined Contribution Plan
Defined Contribution Plan	11. Defined Contribution Plan Prior to the Separation, Ironwood maintained a defined contribution 401(k) Savings Plan in the form of a qualified 401(k) plan for the benefit of substantially all of its employees, which included Ironwood employees who became Cyclerion employees. Compensation expense related to the 401(k) match was allocated to Cyclerion using a pro-rata method based on project-related costs and headcount that management believes are consistent and reasonable. Subsequent to the Separation, Cyclerion adopted a defined contribution 401(k) Savings Plan similar to the plan in place at Ironwood. The plan assets under the Ironwood defined contribution 401(k) Savings Plan were transferred to the Cyclerion plan. Subject to certain IRS limits, eligible employees may elect to contribute from 1% to 100% of their compensation. Cyclerion contributions to the plan are at the sole discretion of the board of directors. Currently, Cyclerion provides a matching contribution of 75% of the employee’s contributions, up to $6,000 annually. Included in compensation expense for employees that are directly attributable to Cyclerion is approximately $0.3 million for the three months ended March 31, 2020 and 2019.

Workforce Reduction

Workforce Reduction	3 Months Ended
	Mar. 31, 2020
Workforce Reduction
Workforce Reduction	12. Workforce Reduction On October 30, 2019, the Company began a reduction of its current workforce by approximately thirty (30) full-time employees in order to align its resources with its ongoing clinical and preclinical programs, innovation strategy and partnering work. The total one-time costs related to the workforce reduction were approximately $3.0 million. The workforce reduction was substantially completed during the year ended December 31, 2019, in which the Company recorded approximately $2.8 million of severance and benefits costs. The workforce reduction was finalized during the three months ended March 31, 2020, in which the Company recorded approximately $0.2 million in additional severance and benefits costs. The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce for the three months ended March 31, 2020 (in thousands): Amounts Amounts accrued at accrued at December 31, 2019 Charges Amount paid Adjustments March 31, 2020 October 2019 workforce reduction $ 2,009 $ 158 $ 1,491 $ — $ 676 Total $ 2,009 $ 158 $ 1,491 $ — $ 676 The Company recorded $0.6 million in severance and benefits costs related to the February 2019 Ironwood workforce reduction, which was initiated prior to the Separation, for the three months ended March 31, 2019. The remaining accrued balances under this workforce reduction was assumed by Ironwood upon Separation on April 1, 2019.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events
Subsequent Events	13. Subsequent Events On April 21, 2020, the Company received loan proceeds in the amount of approximately $3.5 million pursuant to a promissory note agreement under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. In accordance with the note agreement, the loan is scheduled to mature on April 20, 2022, has a stated interest rate of 1.0% per annum, and has payments of principal and interest that are due monthly after a six-month deferral period when interest accrues, but no payments are due. The loan is subject to all the terms and conditions applicable to all loans made pursuant to the PPP. The loan’s principal and accrued interest are forgivable to the extent that the proceeds are used for eligible purposes, subject to certain limitations, and that the Company maintains its payroll levels over an eight-week period following the loan date. The loan forgiveness amount will be reduced if the Company terminates employees or reduces salaries during the eight-week period. The Company intends to use the proceeds for purposes consistent with the PPP and we believe that a portion of the loan will meet the conditions for loan forgiveness.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The Company did not operate as a separate, stand-alone entity for the prior interim period covered by the interim condensed consolidated and combined financial statements. The Company’s condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, condensed consolidated and combined statements of operations and comprehensive loss and statements of cash flows for the three months ended March 31, 2020 consist of the condensed consolidated balances and activity of Cyclerion as prepared on a stand-alone basis. The Company’s condensed consolidated and combined statements of operations and comprehensive loss and statements of cash flows for the three months ended March 31, 2019 have been prepared on a “carve out” basis. The unaudited condensed consolidated and combined financial statements reflect the historical results of the operations, financial position and cash flows of Cyclerion, in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The accompanying unaudited condensed consolidated and combined financial statements reflect the condensed consolidated and combined financial position and condensed consolidated and combined results of operations of the Company as an independent, publicly-traded company for the period after the Separation on April 1, 2019. The unaudited condensed consolidated and combined financial statements also reflect the financial position and results of operations of the Company as a combined reporting entity of Ironwood for periods prior to the Separation. For periods prior to the Separation, the unaudited condensed consolidated and combined financial statements of Cyclerion reflect the assets, liabilities, and expenses directly attributable to Cyclerion, as well as allocations of certain corporate level expenses, deemed necessary to fairly present the results of operations and cash flows of Cyclerion, as discussed further below. As such, these allocations may not be indicative of the actual amounts that would have been recorded had Cyclerion operated as an independent, publicly traded company for the years presented. Prior to the Separation, Cyclerion was dependent upon Ironwood for all of its working capital and financing requirements, as Ironwood used a centralized approach to cash management and financing its operations. There were no cash amounts specifically attributable to Cyclerion for the historical periods presented; therefore, there is no cash reflected for historical periods in the condensed consolidated and combined financial statements. Accordingly, cash and cash equivalents, debt or related interest expense have not been allocated to Cyclerion in the historical financial statements. Financing transactions related to Cyclerion are accounted for as a component of net parent investment in the historical combined balance sheets and as a financing activity on the accompanying combined statements of cash flows. Prior to the Separation, Cyclerion’s combined financial statements included an allocation of expenses related to certain Ironwood corporate functions, including senior management, legal, human resources, finance, information technology and quality assurance. These expenses were allocated to Cyclerion based on direct usage or benefit where identifiable, with the remainder allocated pro-rata based on project related costs, headcount or other measures. These allocations may not be indicative of the actual expense that would have been incurred had Cyclerion operated as an independent, publicly traded company for the periods presented. Prior to the Separation, the combined balance sheets of Cyclerion included assets and liabilities that were allocated principally on a specific identification basis and net parent investment was shown in lieu of stockholders’ equity. As a result of the Separation, the Company’s net parent investment balance was reclassified to paid-in capital.
Leases	Leases The Company has a property lease for its headquarters location at 301 Binney Street, Cambridge, MA (the “Master Lease”). The Company determines if an arrangement is a lease at the inception of the contract. The asset component of the Company’s operating leases is recorded as operating lease right-of-use (“ROU”) assets, and the liability component is recorded as current portion of operating lease liabilities and operating lease liabilities, net of current portion, in the Company’s consolidated balance sheets. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. The Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments if an implicit rate of return is not provided with the lease contract. Operating lease right-of-use assets are adjusted for incentives received. Lease cost is recognized on a straight-line basis over the lease term, and includes amounts related to short-term leases. Variable lease costs that do not depend on an index or rate are recognized as incurred. ROU assets and operating lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification. The difference between the remeasured ROU assets and the operating lease liabilities are recognized as a gain or loss in operating expenses. The Company reviews any changes to its lease agreements for potential modifications and/or indicators of impairment of the respective ROU asset. On October 18, 2019, the Company entered into an agreement to sublease 15,700 rentable square feet of its Master Lease to a subtenant. Sublease income is recognized on straight-line basis over the term of the sublease agreement and is recorded net of the related rent expense from the Master Lease within interest and other income in the condensed consolidated and combined statements of operations and comprehensive loss. In sublease agreements that contain non-monetary consideration, the Company estimates the fair market value of the non-monetary consideration received using market data and recognizes it on a straight-line basis over the sublease term. Variable lease consideration that does not depend on an index or rate is allocated to a non-lease component and is recognized over time in accordance with the pattern of transfer. No modification or impairment was deemed to have occurred by entering into the sublease agreement because the Company was not released, either fully or in part, from its obligations under the Master Lease. See Note 8, Leases . On February 28, 2020 the Company entered into an amendment to our Master Lease at 301 Binney Street in Cambridge, Massachusetts (the “Lease Amendment”). The Lease Amendment provided for the partial termination of the Company's rights and obligations with respect to a portion of the leased premises of approximately 40,000 rentable square feet. The Company will continue to lease approximately 74,000 rentable square feet under terms of the amended lease. The Lease Amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. As such, the ROU assets and operating lease liabilities were remeasured using an incremental borrowing rate at the date of modification and the Company recorded a gain of approximately $2.1 million as a component of operating expenses. No impairment of the ROU asset was deemed to have occurred. See Note 8, Leases .
New Accounting Pronouncements	New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Except as discussed elsewhere in the notes to the condensed consolidated and combined financial statements, the Company did not adopt any new accounting pronouncements during the three months ended March 31, 2020 that had a material effect on its condensed consolidated and combined financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will change how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”) to provide additional guidance on the adoption of ASU 2016-13, ASU No. 2019-10, Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”), ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses (“ASU 2019-11”) and ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)("ASU 2020-02"). ASU 2019-04 added Topic 326, Financial Instruments—Credit Losses, and made several amendments to the codification and also modified the accounting for available-for-sale debt securities. ASU 2019-05 provides targeted transition relief by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. ASU 2019-10 aligned the effective dates of certain major updates not yet effective to conform to the FASB’s new philosophy of staggering major updates between large public companies and all other entities. ASU 2019-11’s major provisions included additional clarifications and practical expedients related to expected recoveries for purchased assets with credit deterioration, troubled debt restructuring, accrued interest receivables, and other areas when adopting ASU 2016-13. ASU 2020-02 provided amendments to the Topic 326 including a new section related to credit losses measured at amortized cost and a clarification to Topic 842 and is effective when adopting other areas of Financial Instruments-Credit Losses Topic 326. As a public business entity that qualifies as a smaller reporting company, ASU 2016-13, ASU 2019-04 and ASU 2019-05 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of these ASUs will have on the Company’s financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ASU 2018-13”): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurement (“ASU 2018-13”) which amends the disclosure requirements for fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-13 in the first quarter of 2020 and the adoption of this standard did not have a material impact on the Company’s financial position or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal Use Software (ASC 350-40), to determine which implementation costs to capitalize as assets or expense as incurred. The internal-use software guidance in ASC 350-40 requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. A customer’s accounting for the hosting component of the arrangement is not affected by this guidance. The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-15 in the first quarter of 2020 and the adoption of this standard did not have a material impact on the Company’s financial position or results of operations. No other accounting standards known by the Company to be applicable to it that have been issued by the FASB or other standard-setting bodies and that do not require adoption until a future date are expected to have a material impact on the Company’s condensed consolidated and combined financial statements upon adoption.

Fair Value of Financial Instr_2

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2020
Fair Value of Financial Instruments
Schedule of financial assets measured at fair value on a recurring basis and indicating the level of the fair value hierarchy	The Company’s cash equivalents are generally classified within Level 1 of the fair value hierarchy. The following tables presents information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values as of March 31, 2020 and December 31, 2019 (in thousands): Fair Value Measurements as of March 31, 2020 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 66,167 $ — $ — $ 66,167 Cash equivalents $ 66,167 $ — $ — $ 66,167 Fair Value Measurements as of December 31, 2019 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 93,859 $ — $ — $ 93,859 Cash equivalents $ 93,859 $ — $ — $ 93,859

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2020
Property and Equipment
Schedule of property and equipment, net	Property and equipment, net consisted of the following (in thousands): March 31, December 31, 2020 2019 Laboratory equipment $ 13,335 $ 14,505 Software 2,232 2,232 Construction in progress 11 915 Computer and office equipment 1,547 1,890 Leasehold improvements 15,194 13,673 Property and equipment, gross 32,319 33,215 Less: accumulated depreciation and amortization (20,719) (21,602) Property and equipment, net $ 11,600 $ 11,613

Accrued Expenses and Other Cu_2

Accrued Expenses and Other Current Liabilities (Tables)	3 Months Ended
	Mar. 31, 2020
Accrued Expenses and Other Current Liabilities
Schedule of accrued expenses and other current liabilities	Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31, 2020 2019 Accrued incentive compensation $ 967 $ 3,767 Salaries 981 1,730 Accrued vacation 899 969 Professional fees 313 441 Accrued severance and benefit costs 676 2,009 Other 727 404 Accrued expenses and other current liabilities $ 4,563 $ 9,320

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2020
Leases
Schedule of supplemental cash flow information related to leases	Supplemental cash flow information related to leases for the three months ended March 31, 2020 is as follows: Decrease in right-of-use assets related to lease modification $ 21,386 Decrease in operating lease liabilities due to lease modification $ 23,499 Cash paid for amounts included in the measurement of lease liabilities (in thousands) $ 2,421 Weighted-average remaining lease term of operating leases (in years) Weighted-average discount rate of operating leases 9.7 %
Future minimum lease payments under non-cancelable operating leases under ASC 842 as well as the total future minimum lease payments to be received under the sublease agreement	Future minimum lease payments under non-cancelable operating leases under ASC 842 as well as the total future minimum lease payments to be received under the sublease agreement as of March 31, 2020 are as follows: Operating Sublease Lease Payments to Payments be Received 2020 (remaining nine months) $ 5,484 $ (998) 2021 7,469 (1,636) 2022 7,686 (1,683) 2023 7,909 (1,733) 2024 8,139 (1,783) 2025 and thereafter 39,658 (8,694) Total future minimum lease payments (receipts) 76,345 $ (16,527) Less: present value adjustment 26,622 Operating lease liabilities at March 31, 2020 49,723 Less: current portion of operating lease liabilities 2,668 Operating lease liabilities, net of current portion $ 47,055

Share-based Compensation Plans

Share-based Compensation Plans (Tables)	3 Months Ended
	Mar. 31, 2020
Share-based Compensation Plans
Schedule of share-based compensation expense	The following table provides share-based compensation reflected in the Company’s condensed consolidated and combined statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended March 31, 2020 2019 Research and development $ 1,921 $ 1,796 General and administrative 2,115 2,193 $ 4,036 $ 3,989

Loss per share (Tables)

Loss per share (Tables)	3 Months Ended
	Mar. 31, 2020
Loss per share
Schedule of basic and diluted earnings per share	Three Months Ended March 31, 2020 2019 Numerator: Net loss (in thousands) $ (20,228) $ (37,381) Denominator: Weighted average shares used in calculating net loss per share - basic and diluted (in thousands) 27,669 27,380 Net loss per share - basic and diluted $ (0.73) $ (1.37)

Workforce Reduction (Tables)

Workforce Reduction (Tables)	3 Months Ended
	Mar. 31, 2020
Workforce Reduction
Schedule of accrued liabilities activity allocated to Cyclerion in connection with the reduction in workforce	The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce for the three months ended March 31, 2020 (in thousands): Amounts Amounts accrued at accrued at December 31, 2019 Charges Amount paid Adjustments March 31, 2020 October 2019 workforce reduction $ 2,009 $ 158 $ 1,491 $ — $ 676 Total $ 2,009 $ 158 $ 1,491 $ — $ 676

Nature of Business (Details)

Nature of Business (Details) $ in Millions	Apr. 02, 2019USD ($)shares	Apr. 01, 2019	May 03, 2019employee
The Separation
Common stock dividend issued (shares of Cyclerion per ten shares of Ironwood)		0.1
Cyclerion GmbH
Nature of Operations
Number of employees | employee			1
Private Placement
The Separation
Shares issued to accredited investors | shares	11,817,165
Gross proceeds from issuance of shares to accredited investors	$ 175
Net proceeds from issuance of shares to accredited investors	$ 165

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) $ in Thousands	Feb. 28, 2020USD ($)ft²	Mar. 31, 2020USD ($)	Oct. 18, 2019ft²	Apr. 01, 2019ft²
Leases
Gain on lease modification | $		$ 2,113
Master Lease
Leases
Space subleased to third party (in square feet)			15,700
Rented space (in square feet)				114,000
Lease Amendment
Leases
Rented space (in square feet)	74,000
Gain on lease modification | $	$ 2,100
ROU asset, impairment loss | $	$ 0
Rentable space terminated from lease agreement (in square feet)	40,000

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	Apr. 02, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Related Party Transactions
Revenue from related party		$ 1,014
Payments to provide research and development transaction support services		100
Ironwood | Separation agreement
Related Party Transactions
Amounts due to related party				$ 100
Ironwood | Development agreement
Related Party Transactions
Revenue from related party		1,000
Amounts due from related party		$ 1,000		$ 1,500
Ironwood | Corporate costs
Related Party Transactions
Related party expense			$ 6,800
Peter Hecht | Private Placement
Related Party Transactions
Number of shares of Ironwood common stock donated to American Endowment Foundation	2,500,000
American Endowment Foundation | Private Placement
Related Party Transactions
Investment in common stock by related party	$ 34,000
Mark Currie | Private Placement
Related Party Transactions
Investment in common stock by related party	$ 4,000

Fair Value of Financial Instr_3

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Cash equivalents:
Total cash equivalents		$ 93,859
Money market funds
Cash equivalents:
Total cash equivalents		93,859
Level 1
Cash equivalents:
Total cash equivalents		93,859
Level 1 | Money market funds
Cash equivalents:
Total cash equivalents		$ 93,859
Recurring
Cash equivalents:
Total cash equivalents	$ 66,167
Recurring | Money market funds
Cash equivalents:
Total cash equivalents	66,167
Recurring | Level 1
Cash equivalents:
Total cash equivalents	66,167
Recurring | Level 1 | Money market funds
Cash equivalents:
Total cash equivalents	$ 66,167

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property and Equipment
Gross property and equipment	$ 32,319		$ 33,215
Less: accumulated depreciation and amortization	(20,719)		(21,602)
Property and equipment, net	11,600		11,613
Depreciation and amortization	626	$ 525
Gain on disposal of property and equipment	41
Operating expenses
Property and Equipment
Gain on disposal of property and equipment	100
Laboratory equipment
Property and Equipment
Gross property and equipment	13,335		14,505
Software
Property and Equipment
Gross property and equipment	2,232		2,232
Construction in progress
Property and Equipment
Gross property and equipment	11		915
Leasehold improvements			900
Computer and office equipment
Property and Equipment
Gross property and equipment	1,547		1,890
Leasehold improvements
Property and Equipment
Gross property and equipment	15,194		$ 13,673
Fixed assets put into service during the period	$ 1,500

Accrued Expenses and Other Cu_3

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued Expenses and Other Current Liabilities
Accrued incentive compensation	$ 967	$ 3,767
Salaries	981	1,730
Accrued vacation	899	969
Professional fees	313	441
Accrued severance and benefit costs	676	2,009
Other	727	404
Workforce reduction charges	676	2,009
Accrued expenses and other current liabilities	$ 4,563	$ 9,320

Leases - Summary (Details)

Leases - Summary (Details) $ in Thousands	Feb. 28, 2020USD ($)ft²	Apr. 01, 2019USD ($)ft²item	Mar. 31, 2020USD ($)	Dec. 31, 2019USD ($)	Mar. 31, 2019USD ($)
Leases
Lease liability			$ 49,723
Current portion of operating lease liabilities			2,668	$ 3,420
Noncurrent lease liability			47,055	70,500
Right-of-use asset			52,254	68,137
Total lease costs			2,700
Decrease in right-of-use assets related to lease modification			21,386
Decrease in operating lease liabilities due to lease modification			23,499
Cash paid for amounts included in the measurement of lease liabilities (in thousands)			$ 2,421
Weighted-average remaining lease term of operating leases (in years)			9 years 3 months 18 days
Weighted-average discount rate of operating leases			9.70%
Gain on lease modification			$ 2,113
Master Lease
Leases
Rented space (in square feet) | ft²		114,000
Term of lease		123 months
Number of extension option | item		2
Renewal term		5 years
Letter of credit posted with the landlord as a security deposit		$ 7,700
Annual base rent			11,000
Increase in base rent on a yearly basis (as a percent)		3.00%
Abatement of base rent		$ 2,700
Incremental borrowing rate (as a percent)		10.90%
Lease liability		$ 71,300
Tenant improvement allowance		2,300
Right-of-use asset		$ 71,300
Master Lease | Property, plant and equipment
Leases
Tenant improvement allowance				2,300	$ 2,300
Lease Amendment
Leases
Rentable space terminated from lease agreement (in square feet) | ft²	40,000
Rented space (in square feet) | ft²	74,000
Decrease in security deposit	$ 2,700
Letter of credit posted with the landlord as a security deposit	$ 5,000
Incremental borrowing rate (as a percent)	9.70%
Current portion of operating lease liabilities			2,700	3,400
Noncurrent lease liability			47,100	70,500
Right-of-use asset			52,300	$ 68,100
Variable lease costs			$ 1,000
Decrease in remaining operating lease payments	$ 41,900
Cash paid for lease termination fees	6,300
Cash paid for initial direct costs of lease modification	200
Decrease in right-of-use assets related to lease modification	21,400
Decrease in operating lease liabilities due to lease modification	23,500
Gain on lease modification	$ 2,100

Leases - Sublease as Lessee (De

Leases - Sublease as Lessee (Details) - Ironwood	Mar. 31, 2019ft²
Sublease as lessee
Rentable square feet	24,000
Sublease initial term	1 month
Operating sublease, option to extend	true
Subleased term	1 month 15 days

Leases - Sublease as Lessor (De

Leases - Sublease as Lessor (Details) - Master Lease $ in Millions	Oct. 18, 2019USD ($)ft²item	Mar. 31, 2020USD ($)
Sublease as lessor
Space subleased to third party (in square feet) | ft²	15,700
Sublease, Annual base rent	$ 1.5
Sublease, Increase in base rent over the term of the lease (as a percent)	3.00%
Sublease, Abatement of base rent	$ 0.7
Sublease, Abatement period	6 months
Sublease, Number of extension options | item	0
Sublease, Initial security deposit received	$ 0.5
Sublease, Additional security deposit to be received	$ 0.4
Sublease, additional security deposit period	9 months
Estimated fair value of services to be received under the sublease agreement	$ 4.2
Gross sublease income, net of rent expense		$ 0.5
Interest and other income
Sublease as lessor
Net sublease income		$ 0.1

Leases - Future minimum lease o

Leases - Future minimum lease operating payments and sublease payments to be received (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Future minimum lease payments under non-cancelable operating leases under ASC 842
2020 (remaining nine months)	$ 5,484
2021	7,469
2022	7,686
2023	7,909
2024	8,139
2025 and hereafter	39,658
Total future minimum lease payments	76,345
Less: present value adjustment	26,622
Operating lease liabilities	49,723
Less: current portion of operating lease liabilities	2,668	$ 3,420
Operating lease liabilities, net of current portion	47,055	$ 70,500
Future minimum lease payments to be received under the sublease agreement
2020 (remaining nine months)	(998)
2021	(1,636)
2022	(1,683)
2023	(1,733)
Lessor, Operating Lease, Payments to be Received, Four Years	1,733
2024	(1,783)
2025 and thereafter	(8,694)
Total future minimum lease payments receipts	$ (16,527)

Share-based Compensation Plan_2

Share-based Compensation Plans (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)employee$ / sharesshares	Mar. 31, 2019USD ($)
Share-based Compensation Plans
Number of employees impacted | employee	143
Share-based compensation	$ 4,036	$ 3,989
Research and development
Share-based Compensation Plans
Share-based compensation	1,921	1,796
General and administrative
Share-based Compensation Plans
Share-based compensation	2,115	$ 2,193
Restricted Stock Units
Share-based Compensation Plans
Incremental compensation expense due to modification	0
Unrecognized share-based compensation expense	$ 5,300
Expected period to recognize the expense	2 years 6 months
Restricted Stock Awards
Share-based Compensation Plans
Incremental compensation expense due to modification	$ 0
Stock options
Share-based Compensation Plans
Granted (in shares) | shares	165,846
Weighted average grant date fair value per option share | $ / shares	$ 1.71
Unrecognized share-based compensation expense	$ 22,200
Expected period to recognize the expense	2 years 9 months 18 days
Vested stock options
Share-based Compensation Plans
Incremental compensation expense due to modification	$ 300
Unvested stock options
Share-based Compensation Plans
Incremental compensation expense due to modification	7,500
Performance stock options
Share-based Compensation Plans
Unrecognized share-based compensation expense	$ 400
Expected period to recognize the expense	4 years 1 month 6 days

Loss per share (Details)

Loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Numerator:
Net loss	$ (20,228)	$ (37,381)
Denominator:
Number of common shares used in net loss per share - basic and diluted (in thousands)	27,669	27,380
Net loss per share - basic and diluted	$ (0.73)	$ (1.37)
Common stock, shares outstanding	27,754,894	0	27,598,133
Stock options
Denominator:
Anti-dilutive securities excluded from the calculation of diluted loss per share	7,936,087
Restricted Stock Units
Denominator:
Anti-dilutive securities excluded from the calculation of diluted loss per share	499,644

Defined Contribution Plan (Deta

Defined Contribution Plan (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Defined Contribution Plan
401 (k) Savings Plan	us-gaap:QualifiedPlanMember
Matching contribution (as a percent of employee's contributions)	75.00%
Maximum amount of employer matching contribution	$ 6,000
Defined contribution plan expense	$ 300,000	$ 300,000
Minimum
Defined Contribution Plan
Percent of compensation eligible employees may elect to contribute	1.00%
Maximum
Defined Contribution Plan
Percent of compensation eligible employees may elect to contribute	100.00%

Workforce Reduction (Details)

Workforce Reduction (Details)	Oct. 30, 2019USD ($)	Mar. 31, 2020USD ($)	Mar. 31, 2019USD ($)	Dec. 31, 2019USD ($)
Summary of accrued liabilities activity related to workforce reductions
Beginning of period		$ 2,009,000
Charges		158,000
Amount paid		1,491,000
End of period		676,000		$ 2,009,000
October 2019 Reduction
Summary of accrued liabilities activity related to workforce reductions
Beginning of period		2,009,000
Charges		158,000
Amount paid		1,491,000
End of period		676,000		2,009,000
February 2019 Reduction
Workforce Reduction
Severance and benefits costs			$ 600,000
Current workforce reductions | October 2019 Reduction
Workforce Reduction
Reduction in workforce, number of employees	30
Restructuring Costs	$ 3,000,000
Severance and benefits costs		$ 200,000		$ 2,800,000

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event - PPP $ in Millions	Apr. 21, 2020USD ($)
Subsequent Events
Proceeds from promissory note agreement	$ 3.5
Stated interest rate	1.00%
Deferral period	6 months
Forgiveness period	56 days