CYCLERION THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes and the related Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form
10-K. 49 Forward-Looking Information The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated and combined financial statements and the notes to those financial statements appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Special Note Regarding Forward-Looking Statements" and "Risk Factors" in Item 1A of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. Overview We are a clinical-stage biopharmaceutical company harnessing the power of soluble guanylate cyclase, or sGC, pharmacology to discover, develop and commercialize breakthrough treatments for serious and orphan diseases. Our focus is enabling the full therapeutic potential of next-generation sGC stimulators. Our strategy rests on a solid scientific foundation that is enabled by our people and capabilities, external collaborations and a responsive capital allocation approach.
We operate in one reportable business segment-human therapeutics.
Separation from Ironwood Pharmaceuticals
OnApril 1, 2019 , Ironwood Pharmaceuticals Inc., or Ironwood, completed the separation of its sGC business, and certain other assets and liabilities, into us as a separate, independent publicly traded company by way of a pro-rata distribution of our common stock through a dividend distribution of one share of our 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 onMarch 19, 2019 , the record date for the distribution, which we refer to herein as the Separation. As a result of the Separation, we became an independent public company and commenced trading under the symbol "CYCN" on the Nasdaq Global Select Market onApril 2, 2019 .
In connection with the Separation, on
In addition, in connection with the Separation, onApril 1, 2019 , we entered into a Development Agreement, an Ironwood Transition Services Agreement, a Cyclerion Transition Services Agreement and an Intellectual Property License Agreement with Ironwood. OnApril 2, 2019 , we issued 11,817,165 shares of our common stock, or the Private Placement Shares, to accredited investors for gross proceeds of$175 million (net proceeds of approximately$165 million ) pursuant to the Amended and Restated Common Stock Purchase Agreement. We received the funds associated with the sale of the Private Placement Shares onApril 2, 2019 . Our historical consolidated and combined financial statements for the periods prior to the Separation have been derived from Ironwood's combined financial statements and accounting records and are presented in conformity with United States Generally Accepted Accounting Principles, orU.S. GAAP. Our consolidated and combined financial statements reflect our financial position, results of operations and cash flows of the business that were transferred to us in the Separation. The historical financial statements may not be indicative of our future performance and do not necessarily reflect what our results of operations, financial condition and cash flows would have been had we operated as a separate, publicly traded company for the periods presented prior to the Separation. The consolidated and combined financial statements prior to the Separation included herein do not reflect any changes that occurred in our financing or operations as a result of the Separation from Ironwood. Financial Overview Research and Development Expense.Research and development expenses are incurred in connection with the discovery and development of our product candidates. These expenses consist primarily of the following costs: compensation, benefits and other employee-related expenses, research and development related facilities, third-party contracts relating to nonclinical study and clinical trial activities. All research and development expenses are charged to operations as incurred. 50 The core of our research and development strategy is to harness the power of sGC pharmacology to develop therapies for serious and orphan diseases. Our portfolio of programs includes: Olinciguat is a once-daily, orally administered vascular sGC stimulator that is well suited for the potential treatment of sickle cell disease, or SCD. We are conducting a dose-ranging Phase 2 study, STRONG-SCD, that is expected to enroll up to 88 patients from both US and ex-US sites. This study is designed to explore a broad range of tolerated doses and optimize our understanding of the therapeutic potential of olinciguat in SCD. We expect topline data from this study in mid-2020. InJune 2018 , theU.S. Food and Drug Administration , or the FDA, granted Orphan Drug Designation to olinciguat for the treatment of patients with SCD. Orphan Drug Designation provides marketing exclusivity for seven years from the date of the product's approval for marketing and contributes to a significant reduction in development costs. Praliciguat is an orally administered, once-daily systemic sGC stimulator that was evaluated in two recently completed Phase 2 proof-of-concept studies: a dose-ranging study in 156 adult patients with diabetic nephropathy, and a study in 196 adult patients with heart failure with preserved ejection fraction (HFpEF), CAPACITY-HFpEF. OnOctober 30, 2019 , we released topline results from these studies. In CAPACITY-HFpEF, the study did not meet statistical significance on its primary endpoint of improved exercise capacity from baseline as compared to placebo, measured by cardiopulmonary exercise testing. There was clear evidence of drug exposure and pharmacological activity as judged by expected reductions in blood pressure. Praliciguat was generally well tolerated. We are discontinuing development of praliciguat in HFpEF. The study of praliciguat in participants with diabetic nephropathy also did not meet statistical significance on its primary endpoint of reduction in albuminuria from baseline as compared to placebo, measured by urine albumin creatinine ratio. However, there was a trends toward improvement across the total intention-to-treat study population. Praliciguat was generally well tolerated. As previously announced, we intend to out-license praliciguat for late-stage global development and commercialization. IW-6463 is an orally administered central nervous system-penetrant sGC stimulator that, because it readily crosses the blood-brain barrier, affords an unprecedented opportunity to expand the utility of sGC pharmacology to serious neurodegenerative diseases. . OnJanuary 13, 2020 we released positive top line results from our first-in-human study of IW-6463. IW-6463 was generally well tolerated in healthy human adults. The study demonstrated IW-6463 penetration across the blood-brain-barrier at levels expected to be pharmacologically active as well as a mild reduction in blood pressure providing evidence of peripheral pharmacological activity. The Company intends to continue development activities for IW-6463. InDecember 2019 we initiated an ongoing translational pharmacology study in elderly subjects. Topline data from this study is expected in mid-2020.Discovery Research . Our discovery efforts are primarily focused on identifying, designing and developing sGC stimulators for serious and orphan diseases. sGC stimulation is a powerful mechanism that can broadly regulate blood flow, inflammation, fibrosis and metabolism. In diseases that are localized to specific organs or tissues, we believe that our organ-targeting strategy will maximize the efficacy of sGC pharmacology in these organs while reducing the potential for dose-limiting hemodynamic effects sometimes observed with sGC stimulation. Our initial focus is on the liver and the lung due to the clear role of nitric oxide signaling in diseases with high unmet need that affect these organs. Additional discovery efforts are ongoing and aimed at further expanding the potential of sGC stimulation in disorders of the CNS. The following table summarizes our research and development expenses related to our product pipeline, as well as employee and facility related costs allocated to research and development expense, for the years endedDecember 31, 2019 and 2018. These product pipeline expenses relate primarily to external costs associated with nonclinical studies and clinical trial costs, which are presented by development candidates. 51 Years Ended December 31, 2019 2018 (in thousands) Product pipeline external costs: Praliciguat$ 13,344 $ 17,814 Olinciguat 13,064 6,603 IW-6463 4,278 2,603 Discovery research 1,293 2,248 Total product pipeline external costs 31,979 29,268 Personnel and related internal costs 40,008 37,029 Facilities and other 23,153 21,419 Total research and development expenses$ 95,140 $ 87,716 Securing regulatory approvals for new drugs is a lengthy and costly process. Any failure by us to obtain, or any delay in obtaining, regulatory approvals would materially adversely affect our product development efforts and our business overall.
Given the inherent uncertainties of pharmaceutical product development, we cannot estimate with any degree of certainty how our programs will evolve, and therefore the amount of time or money that would be required to obtain regulatory approval to market them. As a result of these uncertainties surrounding the timing and outcome of any approvals, we are currently unable to estimate precisely when, if ever, our discovery and development candidates will be approved. We invest carefully in our pipeline, and the commitment of funding for each subsequent stage of our development programs is dependent upon the receipt of clear, supportive data.
The successful development of our product candidates is highly uncertain and subject to a number of risks including, but not limited to:
· The duration of clinical trials may vary substantially according to the type
and complexity of the product candidate and may take longer than expected.
· The FDA and comparable agencies in foreign countries impose substantial and
varying requirements on the introduction of therapeutic pharmaceutical
products, which typically require lengthy and detailed laboratory and clinical
testing procedures, sampling activities and other costly and time-consuming
procedures.
· Data obtained from nonclinical and clinical activities at any step in the
testing process may be adverse and lead to discontinuation or redirection of
development activity. Data obtained from these activities also are susceptible
to varying interpretations, which could delay, limit or prevent regulatory
approval.
· The duration and cost of discovery, nonclinical studies and clinical trials may
vary significantly over the life of a product candidate and are difficult to
predict.
· The costs, timing and outcome of regulatory review of a product candidate may
not be favorable, and, even if approved, a product may face post-approval
development and regulatory requirements.
· The emergence of competing technologies and products and other adverse market
developments may negatively impact us. As a result of the factors listed above, including the factors discussed under the "Risk Factors" in Item 1A of this Annual Report on Form 10-K, we are unable to determine the duration and costs to complete current or future nonclinical and clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of our product candidates. Development timelines, probability of success and development costs vary widely. We anticipate that we will make determinations as to which additional programs to pursue and how much funding to direct to each program on an ongoing basis in response to the data from the studies of each product candidate, the competitive landscape and ongoing assessments of such product candidate's commercial potential. 52 General and Administrative Expense. General and administrative expense consists primarily of compensation, benefits and other employee-related expenses for personnel in our administrative, finance, legal, information technology, business development, communications and human resource functions. Other costs include the legal costs of pursuing patent protection of our intellectual property, general and administrative related facility costs, insurance costs and professional fees for accounting and legal services. Certain costs associated with our Separation from Ironwood are included in these expenses. We record all general and administrative expenses as incurred.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated and combined financial statements prepared in accordance withU.S. GAAP. The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements, and the amounts of expenses during the reported periods. Significant estimates and assumptions in our consolidated and combined financial statements include those related to allocation of expenses, assets and liabilities from Ironwood's historical financial statements for the periods prior to the Separation, impairment of long-lived assets; income taxes, including the valuation allowance for deferred tax assets; research and development expenses; contingencies and share-based compensation. We base our estimates on our historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from our estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
We believe that our application of accounting policies requires significant judgments and estimates on the part of management and is the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies, of the consolidated and combined financial statements elsewhere in this Annual Report on Form 10-K. All research and development expenses are expensed as incurred. We defer and capitalize nonrefundable advance payments we make for research and development activities until the related goods are received or the related services are performed. See Note 2, Summary of Significant Accounting Policies, of the consolidated and combined financial statements appearing elsewhere in this
Annual Report on Form 10-K.
Results of Operations
For the period prior to the Separation, our consolidated and combined financial
statements include 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. We considered the allocation methodologies used to be a
reasonable and appropriate reflection of the historical Ironwood expenses
attributable to us. The expenses reflected in the consolidated and combined
financial statements may not be indicative of expenses that will be incurred by
us in the future. After the Separation, we began performing these corporate
functions using internal resources or purchased services, certain of which are
being provided by Ironwood under the transition services agreement. The
following discussion summarizes the key factors we believed are necessary for an
understanding of our consolidated financial statements.
53
Years Ended December 31, Change
2019 2018 $ %
(dollars in thousands)Revenue from related party$ 4,507 $ -$ 4,507 100 % Cost and expenses: Research and development 95,140 87,716 7,424 8 % General and administrative 34,404 27,536 6,868
25 % Total cost and expenses 129,544 115,252 14,292 12 % Loss from operations (125,037 ) (115,252 ) (9,785 ) 8 %
Interest and other income 2,029 - 2,029
100 % Net loss$ (123,008 ) $ (115,252 ) $ (7,756 ) 7 %
Revenue from related party. The increase in revenue from related party for the year endedDecember 31, 2019 compared to the year endedDecember 31, 2018 is the result of services performed under the Development Agreement for Ironwood, which was entered into in connection with the Separation. Research and Development Expense. The increase in research and development expense of approximately$7.4 million for the year endedDecember 31, 2019 compared to the year endedDecember 31, 2018 was primarily related to an increase of approximately$3.0 million in employee-related expenses as compared to the pre-Separation allocation costs from Ironwood, including approximately$2.5 million related to one-time costs associated with a workforce reduction, an increase of approximately$1.7 million in facilities and operating costs allocated to research and development, and a net increase of approximately$2.7 million in external research costs. The net increase in external research costs was primarily due to an increase of approximately$6.5 million associated with olinciguat due to increased enrollment and site activity for the STRONG-SCD Phase 2 study as well as supporting ancillary studies, toxicology and manufacturing, and an increase of approximately$1.7 million associated with IW-6463 studies, partially offset by a decrease of approximately$4.5 million associated with praliciguat due to the timing of study activities which ceased enrollment and closed out by the end of 2019 and a decrease of approximately$1.0 million in discovery research. General and Administrative Expense. The increase in general and administrative expenses of approximately$6.9 million for the year endedDecember 31, 2019 compared to the year endedDecember 31, 2018 primarily was driven by increases of approximately$5.8 million in stock-based compensation as compared to the pre-Separation allocation from Ironwood, approximately$2.8 million in other employee-related costs, and approximately$1.0 million in facilities and other operating costs. These increases were partially offset by a net decrease of approximately$2.9 million in consulting fees and other professional services expenses. Interest and other income. Interest and investment income increased by approximately$2.0 million for the year endedDecember 31, 2019 compared to the year endedDecember 31, 2018 due to$1.9 million of interest generated on excess operating funds from investments inU.S. government money market funds and overnight repurchase agreements and the recognition of approximately$0.1 million of net sublease income. There was no investment and sublease income for the year endedDecember 31, 2018 because there was no cash allocated to Cyclerion and no lease directly attributed to Cyclerion prior to the Separation.
Liquidity and Capital Resources
Prior to the Separation, the primary source of liquidity for our business was cash flow allocated to Cyclerion from Ironwood. Transfers of cash to and from Ironwood have been reflected in net parent investment in the historical combined balance sheets, statements of cash flows and statements of changes in stockholders' equity (deficit). Ironwood's cash has not been assigned to us for any of the periods prior to the Separation presented in the consolidated and combined financial statements because those cash balances are not directly attributable to us. Post Separation, transfers of cash to and from Ironwood related to the Transition Service Agreements, Development Agreement and provisions of the Separation Agreement, have been reflected in the consolidated and combined statement of cash flows. 54 After giving effect to the completion of the Separation onApril 1, 2019 , we raised approximately$165 million net of direct financing expenses with the closing of the private placement onApril 2, 2019 . Subsequent to the Separation, we no longer participate in Ironwood's centralized cash management or receive direct funding from Ironwood. OnDecember 31, 2019 , we had approximately$94.9 million of unrestricted cash and cash equivalents. Our cash equivalents include amounts held inU.S. government money market funds. We invest cash in excess of immediate requirements in accordance with our investment policy, which requires all investments held by us to be at least "AAA" rated or equivalent, with a remaining final maturity when purchased of less than twelve months, so as to primarily achieve liquidity and capital preservation. Our ability to fund our operations and capital needs will depend on our ongoing ability to generate cash from operations and access to capital markets and other sources of capital, as further described below. We anticipate that our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures and other general corporate purposes. Going Concern Based on our development plans and clinical stage patient testing and our timing expectations related to the progress of our discovery research programs, we expect that our existing cash and cash equivalents as ofDecember 31, 2019 , will be sufficient to fund our planned operating expenses and capital expenditure requirements through at least the first quarter of 2021. We have based this estimate on assumptions that may prove to be wrong, particularly as the process of testing drug candidates in clinical trials is costly and the timing of progress in these trials is uncertain. Cash Flows The following is a summary of cash flows for the years endedDecember 31, 2019 and 2018: Years Ended December 31, Change 2019 2018 $ % (dollars in thousands)
Net cash used in operating activities
5 %
Net cash used in investing activities
95 %
Net cash provided by financing activities $ 211,571 $ 100,941 $ 110,630 110 %
Cash Flows from Operating Activities
Net cash used in operating activities totaled approximately$102.2 million for the year endedDecember 31, 2019 . The primary uses of cash were our net loss of$123.0 million , changes in assets of approximately$0.1 million and changes in liabilities of approximately$2.2 million . The changes in assets resulted primarily from increases in related party accounts receivable of approximately$1.5 million , prepaid expenses of approximately$1.1 million , and other assets of approximately$0.6 million , partially offset by a decrease in the operating lease right of use asset of approximately$3.1 million . The changes in liabilities resulted primarily from decreases in accrued research and development costs of approximately$3.1 million , accrued expenses of approximately$1.6 million and accounts payable of approximately$0.3 million , partially offset by increases in operating lease liabilities of approximately$2.7 million and related party accounts payable of approximately$0.1 million . These uses of cash were partially offset by non-cash items including share-based compensation of approximately$19.6 million , depreciation and amortization expense of approximately$2.7 million , and loss on disposal of property and equipment of approximately$0.8 million . 55 Net cash used in operating activities totaled approximately$97.5 million for the year endedDecember 31, 2018 . The primary uses of cash were our net loss of$115.3 million and changes in other current assets of less than$0.1 million . These uses of cash were partially offset by non-cash items of approximately$14.0 million , including approximately$12.5 million in share-based compensation expense and approximately$1.5 million in depreciation and amortization expense of property and equipment, changes in assets of$0.4 million resulting primarily from decreases in prepaid expenses and other assets of approximately$0.4 million and$0.1 million , respectively, and changes in liabilities of approximately$3.3 million resulting primarily from increases in accounts payable, accrued research and development costs, and accrued expenses and other current liabilities of approximately$1.0 million ,$0.3 million and$2.0 million , respectively.
Cash Flows from Investing Activities
Cash used in investing activities for the year endedDecember 31, 2019 totaled approximately$6.7 million , resulting from purchases of property and equipment, primarily leasehold improvements, of approximately$6.9 million , partially offset by proceeds from the sale of property and equipment of approximately
$0.2 million .
Cash used in investing activities for the year ended
Cash Flows from Financing Activities
Cash provided by financing activities for the year endedDecember 31, 2019 was approximately$211.6 million , primarily as a result of approximately$164.6 million in net proceeds from the private placement, approximately$46.5 million of cash transferred to us from Ironwood prior to Separation when Ironwood managed our cash and financing arrangements, and approximately$0.5 million from proceeds from the exercises of stock options and the employee stock purchase plan.
Cash provided by financing activities for the year endedDecember 31, 2018 was approximately$100.9 million , resulting from the cash transferred to us from Ironwood based on changes in our cash used for operations. Funding Requirements
We expect our expenses to increase as we advance the preclinical activities and clinical trials of our product candidates. In addition, as a result of the Separation, we expect to continue incur additional costs associated with operating as a public company. Our expenses will also increase as we:
· continue advancing our product candidates into preclinical and clinical
development;
· seek regulatory approvals for any product candidates that successfully complete
clinical trials;
· may potentially hire additional clinical, quality control and scientific
personnel;
· enhance our operational, financial and management systems and
· maintain, expand and protect our intellectual property portfolio.
We believe that our existing cash, cash equivalents and restricted cash as ofDecember 31, 2019 will enable us to fund our operating expenses and capital expenditure requirements through at least the first quarter of 2021. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. 56
Because of the many risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase or decrease significantly as a result of, many factors, including the:
· scope, progress, results and costs of researching and developing our product
candidates, and conducting preclinical studies and clinical trials;
· costs, timing and outcome of regulatory review of our product candidates;
· costs of future activities, including medical affairs, manufacturing and
distribution, for any of our product candidates for which we receive marketing
approval;
· cost and timing of necessary actions to support our strategic objectives;
· costs of preparing, filing and prosecuting patent applications, maintaining and
enforcing our intellectual property rights and defending intellectual property-related claims; and
· timing, receipt and amount of sales of, or milestone payments related to or
royalties on, our current or future product candidates, if any.
A change in any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing of the development of that product candidate. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties. As discussed under the "Risk Factors" in Item 1A of this Annual Report on Form 10-K, to preserve the tax-free treatment of the Separation, we may be barred, in certain circumstances, for a two year period following the Separation, from engaging in certain capital raising transactions. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common shareholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, debt financing would result in increased fixed payment obligations.
If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Commitments and Obligations
Tax-related Obligations
We exclude assets, liabilities or obligations pertaining to uncertain tax
positions from our summary of contractual commitments and obligations as we
cannot make a reliable estimate of the period of cash settlement with the
respective taxing authorities. As of
Other Funding Commitments As ofDecember 31, 2019 , we had, and continue to have, several ongoing studies in various clinical trial stages. Our most significant clinical trial spending is with clinical research organizations, or CROs. The contracts with CROs generally are cancellable, with notice, at our option and do not have any significant cancellation penalties.
Transition from Ironwood and Costs to Operate as an
Our consolidated and combined financial statements for the period prior to the Separation reflect our operating results and financial position as it was operated by Ironwood, rather than as an independent company. As a result of the Separation, we have incurred additional ongoing operating expenses to operate as an independent, publicly traded, company. These costs include the cost of various corporate headquarters functions, incremental information technology-related costs and incremental costs to operate stand-alone accounting, legal, human resources and other administrative functions. We also incur non-recurring expenses and non-recurring capital expenditures. 57 As an independent company, our information technology operating costs may be higher than the costs allocated in the historical combined financial statements. In addition, we will incur non-recurring expenses and capital expenditures to establish independent information technology systems. We have entered into a Transition Services Agreement with Ironwood that will provide us with certain services and resources related to corporate functions for an initial term of up to two years from the date of the Separation (as applicable). This Transition Services Agreement will help us to operate our business independently prior to establishing stand-alone infrastructure. During the transition from Ironwood, we will incur non-recurring expenses to expand our infrastructure. It is not practicable to estimate the costs that would have been incurred in each of the periods presented in the historical financial statements for the functions described above. Actual costs that would have been incurred if we operated as a stand-alone company for the periods prior to the Separation would have depended on various factors, including organizational design, outsourcing and other strategic decisions related to corporate functions, information technology and back office infrastructure.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance. New Accounting Pronouncements
For a discussion of new accounting pronouncements see Note 2, Summary of Significant Accounting Policies, of the consolidated and combined financial statements appearing elsewhere in this Annual Report on Form 10-K.
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