Cypress Up on Revised Ramius Bid - Analyst Blog

Cypress Bioscience, Inc. (CYPB) shares gained more than 21% following the announcement of a revised offer from Ramius LLC. On December 9, 2010, Ramius approached Cypress Bio with a revised offer of $5.50 per share for the outstanding common shares of the company that it does not already own. Ramius currently owns 9.9% of the company.

Ramius had initially approached Cypress Bio in July 2010 with an offer price of $4 per share in cash. However, following the rejection of the initial offer, Ramius came back with a revised offer under which it proposed to pay Cypress Bio's shareholders $4 per share in cash, along with the potential to retain a 50% interest in pipeline candidate CYP-1020. This proposal, too, was turned down by Cypress Bio. Ramius subsequently launched an unsolicited tender offer to acquire Cypress Bio stock at a price of $4.25 per share.

The latest offer represents a 120% premium over Cypress Bio's closing price on July 16, 2010, when Ramius had made its first offer. Ramius said that the latest offer depends on Cypress Bio's willingness to enter into exclusive discussions on December 10. Ramius expects a definite merger to be signed by December 12.

Cypress Bio said that its board of directors is evaluating Ramius' revised offer. Chances are that the board could push for a higher offer price.

Product Portfolio at Cypress Bio

Cypress Bio has an approved product in its portfolio in the form of Savella, which is indicated for the treatment of fibromyalgia. Savella has been developed under an agreement with Forest Labs (FRX) and Cypress Bio receives a 15% royalty on product sales. The company was previously co-promoting Savella with Forest Labs. However, the co-promotion agreement was terminated in August 2010. Cypress Bio expects this move to help cut annual operating costs by about $10 million.

Cypress Bio's pipeline candidates include CYP-1020, Staccato nicotine and carbetocin. Cypress Bio acquired the exclusive North American license for CYP-1020, a novel antipsychotic being developed for the treatment of schizophrenia, by entering into an in-licensing agreement with Israel-based BioLineRx for the development and commercialization of the candidate. CYP-1020 is scheduled to move into a phase IIb study in 2011 with top line results expected in late 2012.

Meanwhile, intranasal carbetocin, a long-acting analog of oxytocin, was acquired under an asset purchase agreement with Marina Biotech, Inc. (MRNA). Cypress Bio intends to move the candidate into clinical studies and is looking to release results from a proof of concept study within two years.

In August 2010, Cypress Bio entered into a license and development agreement with Alexza Pharmaceuticals (ALXA) for Staccato nicotine technology. Staccato nicotine is slated to move into a phase I study in 2011.

 
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