Cypress Rejects Ramius Again - Analyst Blog

Cypress Bioscience Inc. (CYPB) recently announced that its Board of Directors rejected Ramius LLC’s acquisition proposal, terming it as inadequate and not in the best interest of shareholders.

Ramius had initially offered to acquire Cypress Bioscience for $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 Bioscience’s shareholders $4 per share in cash, along with the potential to retain a 50% interest in pipeline candidate CYP-1020 (BL-1020). This proposal, too, was turned down by Cypress Bioscience.

CYP-1020 is the lead pipeline candidate at Cypress Bioscience – the company recently announced that it intends to focus its resources on the development of candidates that target treatments for central nervous system (CNS) disorders.

CYP-1020, which was in-licensed recently from Israel-based BioLineRx, is being developed for the reduction of psychosis and improvement of cognition in patients suffering from schizophrenia.

Results from a proof-of-concept study on CYP-1020 showed that the candidate not only reduced psychosis compared with placebo, it also improved cognition compared with both placebo and the control arm. Cypress Bioscience intends to commence a study with CYP-1020 in early 2011 – top-line results should be out late in the third quarter of 2012. Improved efficacy and a differentiated mechanism of action would help the candidate gain share once launched.

Neutral on Cypress Bioscience

We currently have a Neutral recommendation on Cypress Bioscience, which is supported by a Zacks #3 Rank (short-term 'Hold' rating). While we remain optimistic about its marketed drug Savella’s sales potential, we are concerned about the company’s early stage pipeline. We expect Cypress Bioscience to pursue acquisitions and in-licensing opportunities to drive growth.