aibioCyclerion Therapeutics (now Korsana Biosciences) sets up ATM program with Guggenheim
Tickers KRSA
The agreement covers up to $20,000,000 of stock, but small-float limits cap current sales at $2,994,080.
Key facts
- Company
- Korsana Biosciences, Inc. (NASDAQ: KRSA)
- News type
- Financings
- Primary source
- Korsana Biosciences, Inc. 424B5 (2025-05-07)
The sales agreement
Cyclerion Therapeutics, Inc., the company named in the filing, entered into a sales agreement with Guggenheim Securities, LLC on May 7, 2025. Under it, the company may sell common stock with an aggregate offering price of up to $20,000,000 from time to time, in at-the-market offerings. Guggenheim Securities, LLC acts as the company's agent and will use commercially reasonable efforts to sell the shares. Guggenheim is entitled to a commission of 3.0% of the gross proceeds of the shares it sells. The company has no obligation to sell any shares and may suspend or end the agreement at any time.
The shares are being sold under a Form S-3 shelf registration, File No. 333-284690, with a base prospectus dated February 12, 2025. The company's 8-K says Ropes & Gray LLP, its counsel, issued a legal opinion on the shares sold under the agreement. The prospectus supplement says Guggenheim Securities, LLC is represented by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts.
Why only $2,994,080 can be sold now
The company cannot sell the full $20,000,000 under this prospectus supplement. The offering is capped at $2,994,080, which is the maximum allowed under General Instruction I.B.6 of Form S-3 for a company whose public float is small. That rule bars a company below $75.0 million in public float from selling more than one-third of its float in any 12-month period.
The company put its public float at about $8,982,242 as of April 28, 2025. That figure is based on 2,427,633 shares held by non-affiliates and a price of $3.70 per share, which was the last reported sale price on the Nasdaq Capital Market on that day. The stock trades under the symbol CYCN. The last reported sale price on May 6, 2025 was $3.05 per share.
The company says it has not sold any securities under the rule in the twelve months before the filing. The shelf covers up to $25,000,000 in total, but only the $2,994,080 tranche can be sold under this supplement now.
If all of the shares under the supplement were sold, the company expects net proceeds of about $2,680,000 after commissions and expenses. The company intends to use the money mainly for research and development, preclinical work on any product candidates it identifies, the acquisition or in-licensing of products, and working capital. It says management will have broad discretion over how the money is spent.
The cash position and the going-concern warning
The prospectus supplement says the company had $3.6 million of unrestricted cash and cash equivalents at March 31, 2025. It also says there is substantial doubt about its ability to continue as a going concern, and that it will need to raise capital in the near term to maintain operations. Set against that balance, the capped program would bring in $2,680,000 if fully sold, a small sum next to a going-concern warning.
The company also says its future capital requirements may be significantly higher than what it has now. The filing does not give a cash burn figure or a runway estimate.
What the company is building
The company's annual report for 2024, filed March 4, 2025, describes a strategy to build a new pipeline of therapies for neuropsychiatric diseases. Its foundation program is an individualized therapy for treatment-resistant depression, for which the company has a non-binding option to license agreement covering the intellectual property. The report says the company was founded in 2018 to develop novel soluble guanylate cyclase, or sGC, stimulators, but that its strategy has changed and it no longer intends to pursue internal research on any sGC asset.
The report says the company has discontinued its prior sGC research and development, and that its legacy sGC clinical assets could bring in revenue. It also says it plans to raise funds to execute the treatment-resistant depression plan. The filings do not give a timeline for that program.