Applied has announced a definitive agreement for Cycle Group Holdings to acquire Applied Therapeutics.

Applied’s drug candidate, govorestat, is a novel Central Nervous System (CNS) penetrant Aldose Reductase Inhibitor (ARI) for the treatment of CNS rare metabolic diseases, including Classic Galactosemia, Charcot-Marie-Tooth Sorbitol Dehydrogenase Deficiency (CMT-SORD) and phosphomannomutase 2 congenital disorder of glycosylation (PMM2-CDG).

“We are confident that Cycle has the resources and capabilities to move govorestat forward towards the ultimate goal of bringing a life-changing treatment to the patients suffering from Classic Galactosemia, CMT-SORD and PMM2-CDG, who have always been at the centre of everything we do at Applied. I want to thank the entire Applied team for their perseverance and commitment. We are also grateful to the investigators and patients who have contributed to the development of govorestat,” said Les Funtleyder, Interim Chief Executive Officer and Chief Financial Officer, Applied.

Under the terms of the merger agreement, Cycle will commence a tender offer to acquire all of the outstanding shares of Applied common stock for a per share price of USD 0.088 per share in cash payable at closing plus one non-transferrable Contingent Value Right (CVR) that entitles the holder to receive potential additional payments.

Under the terms of the CVR, holders are eligible for several potential cash payments tied to regulatory and commercial milestones. These include up to USD 0.10 per CVR upon FDA approval of a New Drug Application (NDA) for any galactosemia indication, and an additional USD 0.10 per CVR upon FDA approval of an application for the CMT-SORD indication, both achievable within eight years of closing.

CVR holders may also receive up to USD 0.20 per CVR if worldwide net sales of any product covered by the CVR reach USD 200 million or more in any four-quarter fiscal period within ten years of closing. In addition, each holder is entitled to their pro rata share of any excess cash Applied holds at closing above USD 500,000, capped at USD 1.5 million, as a one-time Closing Cash Payment. All CVR milestone payments, including the Closing Cash Payment, will be made only once, if the corresponding conditions are met.

The transaction is subject to customary closing conditions contained in the merger agreement that will be filed with the SEC, including the tender of a majority of the outstanding shares of Applied common stock. The merger agreement does not include a financing condition. The transaction is expected to close in the first quarter of 2026, subject to satisfaction of the closing conditions. If the tender offer closes, then Cycle would acquire untendered shares of Applied through a second-step merger for the same consideration.

Applied also issued a Promissory Note to Cycle. The Promissory Note is unsecured and enables Applied to receive loans aggregating up to USD 8.5 million from Cycle, to fund Applied’s working capital needs under an approved budget. Cycle’s funding obligations cease, and amounts borrowed immediately becomes repayable, if the transaction is terminated for certain reasons. Absent funds provided by Cycle under the Promissory Note or from another source, Applied would be unable to continue to fund its activities for more than a limited number of days and Applied would anticipate proceeding to wind down operations.

The transaction was unanimously approved by the Applied Board of Directors following an extensive evaluation of strategic alternatives. This evaluation process included numerous discussions with potential counterparties. The Applied Board of Directors determined that entering into the merger agreement with Cycle represented the path that best advanced the interests of Applied and its stockholders.