Separation of Cyclerion Therapeutics and Cyclerion’s $175 Million Private Placement


Ropes & Gray represented Ironwood Pharmaceuticals, a GI-focused healthcare company, in connection with its tax-free spin-off of its soluble guanylate cyclase business, Cyclerion Therapeutics, Inc., and Cyclerion’s private placement of equity. Credit Suisse and J.P. Morgan are serving as joint placement agents for the Cyclerion offering.

Cyclerion Therapeutics, Inc. (Cyclerion) has entered into an agreement for a private placement of up to $175 million. The offering includes commitments from existing Ironwood shareholders, new investors, and certain members of future Cyclerion management. Final proceeds from this offering are expected to support Cyclerion’s sGC stimulator portfolio for at least two years, including four clinical data readouts expected in the second half of 2019. The financing transaction is anticipated to close in early April, immediately following the completion of Ironwood’s planned tax-free spin-off of Cyclerion to Ironwood shareholders.

The amount raised in the private placement is subject to certain potential reductions to preserve the tax-free nature of the spin-off. The number of shares issued and price per share will be determined at the time of the separation and pursuant to the terms of the purchase agreement governing the investment.

It is expected that there will be no ongoing funding between Ironwood and Cyclerion following the separation, other than certain shorter-term transition and other services. Ironwood is not expected to retain equity in Cyclerion, and is not investing in the private placement.

Ropes & Gray represented Ironwood Pharmaceuticals, a GI-focused healthcare company, in connection with its tax-free spin-off with a team including tax partners David Saltzman (Picture) and Benjamin Rogers and securities & public companies partner Paul Kinsella and associate Will Michener.

Involved fees earner: Paul Kinsella – Ropes & Gray; William Michener – Ropes & Gray; Benjamin Rogers – Ropes & Gray; David Saltzman – Ropes & Gray;

Law Firms: Ropes & Gray;

Clients: Ironwood Pharmaceuticals Inc.;

Author: Ambrogio Visconti