Correspondence 0001193125-23-293378 from Cyclerion Therapeutics, Inc. (CYCN)
Cyclerion Therapeutics, Inc.
Date: Dec. 12, 2023 · CIK: 0001755237 · Accession: 0001193125-23-293378
AI Filing Summary & Sentiment
File numbers found in text: 001-38787
Referenced dates: November 28, 2023
Letter
Division of Corporation Finance Office of Life Sciences Filed March 22, 2023 Form 10-Q for the Quarterly Period Ended September 30, 2023 Filed November 13, 2023 File No. 001-38787
Dear Ms. Li and Ms. Connell:
Reference is made to a letter dated November 28, 2023 (the “Comment Letter”) to Peter M. Hecht, the former Chief Executive Officer of Cyclerion Therapeutics, Inc. (the “Company” or “Cyclerion”), setting forth comments of the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) to the Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (the “Quarterly Report), filed by the Company. As previously announced Peter M. Hecht resigned as an officer and employee of Cyclerion effective December 1, 2023. Regina Graul, Ph.D. now serves as President of Cyclerion.
This letter sets forth the Company’s response to the Staff’s comments. The headings and numbered paragraphs in this letter correspond to the headings and numbered paragraphs in the Comment Letter.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Annual Report or the Quarterly Report.
Form 10-Q for the quarterly period ended September 30, 2023
Notes to the Condensed Consolidated Financial Statements
4. Discontinued Operations, page 14
1. You disclose that on May 11, 2023 you sold all of the assets comprising your zagociguat and CY3018 programs (Program Assets) to Tisento Therapeutics Inc. and have presented the operations of the Program Assets as discontinued operations for all periods presented. Please explain to us how you determined that the disposal of these programs results in a strategic shift in your operations given that you continue to hold other soluble guanylate cyclase (“sGC”) stimulators in your product candidate portfolio.
Company Response
In evaluating whether the Program Assets should be presented as discontinued operations, the Company considered the criteria in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-20-45-1B and determined that it met all the criteria to be presented as discontinued operations for the period ended September 30, 2023.
245 First Street
Riverview II, 18th Floor
Cambridge, MA 02142
(857) 327-8778
info@cyclerion.com
cyclerion.com
Furthermore, the Company noted the following excerpt from ASC 205-20-45-1C:
Examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other parts of an entity.
The definition of “strategic shift” in ASC 205-20-45-1B does not include any bright line guidance. Accordingly, significant judgment is required in order to determine whether a disposal constitutes a strategic shift. When evaluating whether a disposal represents a strategic shift, the Company considered the manner in which management has organized, analyzed and managed its product portfolio; the nature of its portfolio, their development priorities and objectives; and how management discusses and discloses the nature of its business and operations in its financial statements, press releases, and other supplemental information.
Prior to the sale of the Program Assets, Cyclerion’s portfolio included novel sGC stimulators that modulate a key node in a fundamental signaling network in both the central nervous system (“CNS”) and the periphery.
The following table is a high-level summary of Cyclerion’s portfolio assets prior to the sale:
Program
Indication(s)
Description
Status
Zagociguat (CNS-penetrant)
MELAS, CIAS, ADV
zagociguat is a CNS-penetrant sGC stimulator that has shown rapid improvements across a range of endpoints reflecting multiple domains of disease activity, including mitochondrial disease-associated biomarkers.
Sold to Tisento as part of the Asset Purchase Agreement.
CY3018 (CNS-penetrant)
Neuropsychiatric
CY3018 is a CNS-penetrant sGC stimulator in preclinical development that has potential for the treatment of neuropsychiatric diseases and disorders.
Sold to Tisento as part of the Asset Purchase Agreement
Olinciguat (peripheral)
Cardiovascular
olinciguat is a vascular sGC stimulator that the Company intends to out-license for cardiovascular diseases.
Management plans to outlicense olinciguat
Praliciguat (peripheral)
Focal Segmental Glomerulosclerosis (FSGS)
praliciguat is a systemic sGC stimulator that is licensed to Akebia and being advanced in rare kidney disease.
Outlicensed to Akebia
As referenced in the Company’s October 6, 2022 press release, the Company’s primary focus was on developing treatments for CNS diseases with CNS penetrant sGC stimulators. While acknowledging all assets within Cyclerion’s portfolio include sGC stimulators, the Program Assets (zagociguat and CY3018) sold to Tisento are uniquely different from the assets retained by Cyclerion (olinciguat and praliciguat). The Program Assets have high exposure to the CNS (i.e., CNS-penetrant sGC stimulators). In contrast, the retained assets are peripheral sGC
245 First Street
Riverview II, 18th Floor
Cambridge, MA 02142
(857) 327-8778
info@cyclerion.com
cyclerion.com
stimulators. The retained assets are therefore not interchangeable with the Program Assets and do not provide the same benefit in CNS and correspondingly the Program Assets do not provide the same benefit for systemic/vascular diseases. Additionally, as part of the Asset Purchase Agreement (“APA”), Cyclerion is contractually prohibited from competing for five (5) years from the closing date from developing CNS-penetrant sGC stimulators or working with any Affiliate or Third Party on CNS-penetrant sGC stimulators (Section 6.13(a) of APA). In addition, Cyclerion does not intend to research CNS-penetrant sGC stimulators in the future. Thus, Cyclerion has strategically shifted out of research and development of CNS-penetrant sGC assets.
After the sale of the Program Assets, the Cyclerion programs being retained are olinciguat and praliciguat which are not CNS focused and are either currently out-licensed (praliciguat) or management plans to out-license (olinciguat). The Company’s prior strategy to conduct research and development on sGC stimulators for CNS has been discontinued subsequent to the sale of the Program Assets. Cyclerion does not intend to internally pursue research and development or commercialization with any type of sGC assets at this time but intends to utilize royalties and milestones by out-licensing olinciguat and praliciguat to pursue opportunities with new assets. The Company has shifted its strategy to identify, non-sGC stimulator assets within the CNS therapeutic area to build a new portfolio. Once the Company identifies new assets outside of the sGC stimulator space, the research and development organization will be built in a fit-for-purpose way to the appropriate size with the appropriate skillsets. This new approach was evidenced by the Company’s “go forward strategy” as referenced in the Company’s May 11, 2023 press release.
The Company’s sale of its Program Assets indicated a strategic shift and based on the aforementioned discussion and analysis the Company concluded that the sale of these disposed assets and prohibitions against competition under the Asset Purchase Agreement represent a strategic shift in Cyclerion’s operations.
2. You disclose that you acquired a 10% equity interest in Tisento Therapeutics Holdings Inc. (Tisento Parent) with a fair value of $5.3 million and that your investment does not provide you with significant influence over Tisento Parent. Please address the following:
•
Provide your analysis under ASC 810-10 in determining whether Tisento Parent is a variable interest entity (VIE), including whether the entity has sufficient equity at risk to finance its activities without additional subordinated financial support.
•
To the extent that Tisento Parent is determined to be a VIE, provide your analysis under ASC 810-10 supporting your determination that you do not have a controlling financial interest in the VIE. Address the following as part of your response:
•
Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest.
•
To the extent that the power is shared among the variable interest holders, clarify whether there is a tie-breaking mechanism in place with respect to key decision making.
•
With respect to investments held by your CEO and any other related parties, provide an analysis under ASC 810-10-25-42 through 25-44B.
•
Provide us with a copy of the Asset Purchase Agreement to assist us with our review.
•
Confirm that you will revise your future filings to provide the VIE-specific disclosures required by ASC 810-10-50, to the extent applicable.
Company Response
•
Provide your analysis under ASC 810-10 in determining whether Tisento Parent is a variable interest entity (VIE), including whether the entity has sufficient equity at risk to finance its activities without additional subordinated financial support.
Cyclerion assessed the accounting for its investment in accordance with ASC 810-10, Consolidation—Overall. After determining that no scope exception applies under the guidance of ASC 810-10-15-12 and ASC 810-10-15-17, Cyclerion concluded that it has a variable interest in Tisento Parent through its investment in Tisento Parent common stock. Tisento Parent does not have sufficient equity to finance its activities without additional
245 First Street
Riverview II, 18th Floor
Cambridge, MA 02142
(857) 327-8778
info@cyclerion.com
cyclerion.com
subordinated financial support as Tisento Parent is a startup entity in its early stages of raising funds and will require significant capital to advance its programs to commercial stage. Therefore, Cyclerion concluded that its investment in Tisento Parent is a variable interest entity (“VIE”) in accordance with ASC 810-10-15-14(a) and is subject to potential consolidation under the VIE model.
To the extent that Tisento Parent is determined to be a VIE, provide your analysis under ASC 810-10 supporting your determination that you do not have a controlling financial interest in the VIE. Address the following as part of your response:
a. Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest.
b. To the extent that the power is shared among the variable interest holders, clarify whether there is a tie-breaking mechanism in place with respect to key decision making.
c. With respect to investments held by your CEO and any other related parties, provide an analysis under ASC 810-10-25-42 through 25-44B.
d. Provide us with a copy of the Asset Purchase Agreement to assist us with our review.
Company Response
a. Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest.
To evaluate potential consolidation under the variable interest model, Cyclerion (1) evaluated the purpose and design of the VIE and the risks the VIE was designed to create and pass along to its variable interest holders; (2) identified the activities related to the risks identified in step 1 that most significantly affect the economic performance of the VIE; and (3) identified the party that makes the significant decisions or controls the activity or activities that most significantly affect the VIE’s economic performance, including whether any other parties have involvement in those decisions (shared power).
Tisento Parent and its subsidiary were initially designed to research and develop novel medicines for diseases with significant unmet medical needs. The primary risks the VIE was designed to create and pass along to its variable interest holders are the operational and financial risks related to a new business in a developing area of science. More specifically, Tisento Parent and its subsidiary’s economic performance is dependent on the execution of the research and development activities and future commercialization of its technology. Accordingly, the activities related to these risks that most significantly impact Tisento Parent and its subsidiary’s economic performance are the decisions relating to the funding, oversight, and execution of research and development activities, which are encapsulated in the operating plan and budget and the personnel of Tisento Parent and its subsidiary.
Cyclerion determined the following activities most significantly impact Tisento Parent and its subsidiary’s economic performance: (1) approval of an operating plan and budget, determining which research and development programs to pursue and how to research and develop the corresponding intellectual property, (2) hiring and firing of management and key research personnel and (3) determination of management’s compensation.
To assess which party has the power to direct these activities, Cyclerion considered Tisento Parent and its subsidiary’s key governance documents, including the articles of incorporation, by-laws, investor rights agreement and voting agreement. Decisions related to the significant activities that most impact the economic performance of Tisento Parent and its subsidiary noted above are made by the Tisento Parent board of directors on behalf of the equity holders. Although there is an executive team led by a CEO running the day-to-day operations, the Tisento board has responsibility for the overall direction, supervision and management of Tisento Parent and its subsidiary.
245 First Street
Riverview II, 18th Floor
Cambridge, MA 02142
(857) 327-8778
info@cyclerion.com
cyclerion.com
Tisento Parent’s board is comprised of five directors. Two directors are nominated by the preferred stockholders which are diverse group of preferred shareholders, and no single preferred shareholder has a majority ownership; one CEO director was elected by the common stockholders, which is Peter M. Hecht1; and the remaining two independent directors were designated by agreement of a majority of the other then serving directors. Cyclerion does not have the right to nominate any director.
As noted above, all activities that most significantly impact Tisento Parent and its subsidiary’s economic performance are directed by the Tisento Parent board and the board approves decisions by a simple majority. Based on the board composition, Cyclerion determined that no one party has control over the Tisento Parent board and power is not shared because the activities that most significantly affect Tisento Parent and its subsidiary’s economic performance do not require the consent of all of the parties. Rather, all decisions are made by a simple majority vote of the Tisento Parent board. Therefore, because Cyclerion controls no director of Tisento Parent, Cyclerion cannot unilaterally direct any of the act
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CORRESP 1 filename1.htm CORRESP 245 First Street Riverview II, 18th Floor Cambridge, MA 02142 (857) 327-8778 info@cyclerion.com cyclerion.com December 12, 2023 By EDGAR Submission U.S. Securities and Exchange Commission Division of Corporation Finance Office of Life Sciences 100 F Street, N.E. Washington D.C. 20549 Attn: Ms. Li Xiao and Ms. Angela Connell Re: Cyclerion Therapeutics Inc. Form 10-K for the Fiscal Year Ended December 31, 2022 Filed March 22, 2023 Form 10-Q for the Quarterly Period Ended September 30, 2023 Filed November 13, 2023 File No. 001-38787 Dear Ms. Li and Ms. Connell: Reference is made to a letter dated November 28, 2023 (the “Comment Letter”) to Peter M. Hecht, the former Chief Executive Officer of Cyclerion Therapeutics, Inc. (the “Company” or “Cyclerion”), setting forth comments of the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) to the Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (the “Quarterly Report), filed by the Company. As previously announced Peter M. Hecht resigned as an officer and employee of Cyclerion effective December 1, 2023. Regina Graul, Ph.D. now serves as President of Cyclerion. This letter sets forth the Company’s response to the Staff’s comments. The headings and numbered paragraphs in this letter correspond to the headings and numbered paragraphs in the Comment Letter. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Annual Report or the Quarterly Report. Form 10-Q for the quarterly period ended September 30, 2023 Notes to the Condensed Consolidated Financial Statements 4. Discontinued Operations, page 14 1. You disclose that on May 11, 2023 you sold all of the assets comprising your zagociguat and CY3018 programs (Program Assets) to Tisento Therapeutics Inc. and have presented the operations of the Program Assets as discontinued operations for all periods presented. Please explain to us how you determined that the disposal of these programs results in a strategic shift in your operations given that you continue to hold other soluble guanylate cyclase (“sGC”) stimulators in your product candidate portfolio. Company Response In evaluating whether the Program Assets should be presented as discontinued operations, the Company considered the criteria in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-20-45-1B and determined that it met all the criteria to be presented as discontinued operations for the period ended September 30, 2023. 245 First Street Riverview II, 18th Floor Cambridge, MA 02142 (857) 327-8778 info@cyclerion.com cyclerion.com Furthermore, the Company noted the following excerpt from ASC 205-20-45-1C: Examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other parts of an entity. The definition of “strategic shift” in ASC 205-20-45-1B does not include any bright line guidance. Accordingly, significant judgment is required in order to determine whether a disposal constitutes a strategic shift. When evaluating whether a disposal represents a strategic shift, the Company considered the manner in which management has organized, analyzed and managed its product portfolio; the nature of its portfolio, their development priorities and objectives; and how management discusses and discloses the nature of its business and operations in its financial statements, press releases, and other supplemental information. Prior to the sale of the Program Assets, Cyclerion’s portfolio included novel sGC stimulators that modulate a key node in a fundamental signaling network in both the central nervous system (“CNS”) and the periphery. The following table is a high-level summary of Cyclerion’s portfolio assets prior to the sale: Program Indication(s) Description Status Zagociguat (CNS-penetrant) MELAS, CIAS, ADV zagociguat is a CNS-penetrant sGC stimulator that has shown rapid improvements across a range of endpoints reflecting multiple domains of disease activity, including mitochondrial disease-associated biomarkers. Sold to Tisento as part of the Asset Purchase Agreement. CY3018 (CNS-penetrant) Neuropsychiatric CY3018 is a CNS-penetrant sGC stimulator in preclinical development that has potential for the treatment of neuropsychiatric diseases and disorders. Sold to Tisento as part of the Asset Purchase Agreement Olinciguat (peripheral) Cardiovascular olinciguat is a vascular sGC stimulator that the Company intends to out-license for cardiovascular diseases. Management plans to outlicense olinciguat Praliciguat (peripheral) Focal Segmental Glomerulosclerosis (FSGS) praliciguat is a systemic sGC stimulator that is licensed to Akebia and being advanced in rare kidney disease. Outlicensed to Akebia As referenced in the Company’s October 6, 2022 press release, the Company’s primary focus was on developing treatments for CNS diseases with CNS penetrant sGC stimulators. While acknowledging all assets within Cyclerion’s portfolio include sGC stimulators, the Program Assets (zagociguat and CY3018) sold to Tisento are uniquely different from the assets retained by Cyclerion (olinciguat and praliciguat). The Program Assets have high exposure to the CNS (i.e., CNS-penetrant sGC stimulators). In contrast, the retained assets are peripheral sGC 245 First Street Riverview II, 18th Floor Cambridge, MA 02142 (857) 327-8778 info@cyclerion.com cyclerion.com stimulators. The retained assets are therefore not interchangeable with the Program Assets and do not provide the same benefit in CNS and correspondingly the Program Assets do not provide the same benefit for systemic/vascular diseases. Additionally, as part of the Asset Purchase Agreement (“APA”), Cyclerion is contractually prohibited from competing for five (5) years from the closing date from developing CNS-penetrant sGC stimulators or working with any Affiliate or Third Party on CNS-penetrant sGC stimulators (Section 6.13(a) of APA). In addition, Cyclerion does not intend to research CNS-penetrant sGC stimulators in the future. Thus, Cyclerion has strategically shifted out of research and development of CNS-penetrant sGC assets. After the sale of the Program Assets, the Cyclerion programs being retained are olinciguat and praliciguat which are not CNS focused and are either currently out-licensed (praliciguat) or management plans to out-license (olinciguat). The Company’s prior strategy to conduct research and development on sGC stimulators for CNS has been discontinued subsequent to the sale of the Program Assets. Cyclerion does not intend to internally pursue research and development or commercialization with any type of sGC assets at this time but intends to utilize royalties and milestones by out-licensing olinciguat and praliciguat to pursue opportunities with new assets. The Company has shifted its strategy to identify, non-sGC stimulator assets within the CNS therapeutic area to build a new portfolio. Once the Company identifies new assets outside of the sGC stimulator space, the research and development organization will be built in a fit-for-purpose way to the appropriate size with the appropriate skillsets. This new approach was evidenced by the Company’s “go forward strategy” as referenced in the Company’s May 11, 2023 press release. The Company’s sale of its Program Assets indicated a strategic shift and based on the aforementioned discussion and analysis the Company concluded that the sale of these disposed assets and prohibitions against competition under the Asset Purchase Agreement represent a strategic shift in Cyclerion’s operations. 2. You disclose that you acquired a 10% equity interest in Tisento Therapeutics Holdings Inc. (Tisento Parent) with a fair value of $5.3 million and that your investment does not provide you with significant influence over Tisento Parent. Please address the following: • Provide your analysis under ASC 810-10 in determining whether Tisento Parent is a variable interest entity (VIE), including whether the entity has sufficient equity at risk to finance its activities without additional subordinated financial support. • To the extent that Tisento Parent is determined to be a VIE, provide your analysis under ASC 810-10 supporting your determination that you do not have a controlling financial interest in the VIE. Address the following as part of your response: • Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest. • To the extent that the power is shared among the variable interest holders, clarify whether there is a tie-breaking mechanism in place with respect to key decision making. • With respect to investments held by your CEO and any other related parties, provide an analysis under ASC 810-10-25-42 through 25-44B. • Provide us with a copy of the Asset Purchase Agreement to assist us with our review. • Confirm that you will revise your future filings to provide the VIE-specific disclosures required by ASC 810-10-50, to the extent applicable. Company Response • Provide your analysis under ASC 810-10 in determining whether Tisento Parent is a variable interest entity (VIE), including whether the entity has sufficient equity at risk to finance its activities without additional subordinated financial support. Cyclerion assessed the accounting for its investment in accordance with ASC 810-10, Consolidation—Overall. After determining that no scope exception applies under the guidance of ASC 810-10-15-12 and ASC 810-10-15-17, Cyclerion concluded that it has a variable interest in Tisento Parent through its investment in Tisento Parent common stock. Tisento Parent does not have sufficient equity to finance its activities without additional 245 First Street Riverview II, 18th Floor Cambridge, MA 02142 (857) 327-8778 info@cyclerion.com cyclerion.com subordinated financial support as Tisento Parent is a startup entity in its early stages of raising funds and will require significant capital to advance its programs to commercial stage. Therefore, Cyclerion concluded that its investment in Tisento Parent is a variable interest entity (“VIE”) in accordance with ASC 810-10-15-14(a) and is subject to potential consolidation under the VIE model. To the extent that Tisento Parent is determined to be a VIE, provide your analysis under ASC 810-10 supporting your determination that you do not have a controlling financial interest in the VIE. Address the following as part of your response: a. Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest. b. To the extent that the power is shared among the variable interest holders, clarify whether there is a tie-breaking mechanism in place with respect to key decision making. c. With respect to investments held by your CEO and any other related parties, provide an analysis under ASC 810-10-25-42 through 25-44B. d. Provide us with a copy of the Asset Purchase Agreement to assist us with our review. Company Response a. Identify the activities of Tisento Parent that most significantly impact its economic performance and explain how you determined that you do not have the power to direct such activities and therefore do not hold a controlling financial interest. To evaluate potential consolidation under the variable interest model, Cyclerion (1) evaluated the purpose and design of the VIE and the risks the VIE was designed to create and pass along to its variable interest holders; (2) identified the activities related to the risks identified in step 1 that most significantly affect the economic performance of the VIE; and (3) identified the party that makes the significant decisions or controls the activity or activities that most significantly affect the VIE’s economic performance, including whether any other parties have involvement in those decisions (shared power). Tisento Parent and its subsidiary were initially designed to research and develop novel medicines for diseases with significant unmet medical needs. The primary risks the VIE was designed to create and pass along to its variable interest holders are the operational and financial risks related to a new business in a developing area of science. More specifically, Tisento Parent and its subsidiary’s economic performance is dependent on the execution of the research and development activities and future commercialization of its technology. Accordingly, the activities related to these risks that most significantly impact Tisento Parent and its subsidiary’s economic performance are the decisions relating to the funding, oversight, and execution of research and development activities, which are encapsulated in the operating plan and budget and the personnel of Tisento Parent and its subsidiary. Cyclerion determined the following activities most significantly impact Tisento Parent and its subsidiary’s economic performance: (1) approval of an operating plan and budget, determining which research and development programs to pursue and how to research and develop the corresponding intellectual property, (2) hiring and firing of management and key research personnel and (3) determination of management’s compensation. To assess which party has the power to direct these activities, Cyclerion considered Tisento Parent and its subsidiary’s key governance documents, including the articles of incorporation, by-laws, investor rights agreement and voting agreement. Decisions related to the significant activities that most impact the economic performance of Tisento Parent and its subsidiary noted above are made by the Tisento Parent board of directors on behalf of the equity holders. Although there is an executive team led by a CEO running the day-to-day operations, the Tisento board has responsibility for the overall direction, supervision and management of Tisento Parent and its subsidiary. 245 First Street Riverview II, 18th Floor Cambridge, MA 02142 (857) 327-8778 info@cyclerion.com cyclerion.com Tisento Parent’s board is comprised of five directors. Two directors are nominated by the preferred stockholders which are diverse group of preferred shareholders, and no single preferred shareholder has a majority ownership; one CEO director was elected by the common stockholders, which is Peter M. Hecht1; and the remaining two independent directors were designated by agreement of a majority of the other then serving directors. Cyclerion does not have the right to nominate any director. As noted above, all activities that most significantly impact Tisento Parent and its subsidiary’s economic performance are directed by the Tisento Parent board and the board approves decisions by a simple majority. Based on the board composition, Cyclerion determined that no one party has control over the Tisento Parent board and power is not shared because the activities that most significantly affect Tisento Parent and its subsidiary’s economic performance do not require the consent of all of the parties. Rather, all decisions are made by a simple majority vote of the Tisento Parent board. Therefore, because Cyclerion controls no director of Tisento Parent, Cyclerion cannot unilaterally direct any of the act