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RA Capital has some experience in this area….
At least found one prior attack that apparently resulted in RA Capital’s solicited outcome …..
RA Capital Healthcare Fund, LP Urges the Board of Northstar Neuroscience, Inc. (NSTR) to Maximize Value to Shareholders by Making a Dividend or Distribution or Implementing a Share Buy-Back Program
Business Wire, Dec 15, 2008 ….. http://findarticles.com/p/articles/mi_m0EIN/is_2008_Dec_15/ai_n31127476/
Which for whatever collective reasons ultimately resulting in NSTR's Dissolution.
Northstar Neuroscience, Inc. Announces Second Liquidating Distribution to Shareholders ……. http://www.knobias.com/story.htm?eid=3.1.49d72e8d00cf9872703b1b2808890c21f00c20ef8792698131264558147f31b9 ….
Monday , December 14, 2009 10:27ET
SEATTLE--(BUSINESS WIRE)-- Northstar Neuroscience, Inc. (OTC:NSTR) today announced that the Company's board of directors approved a second liquidating distribution of $0.10 per share payable to the shareholders of record of the Company's common stock as of July 2, 2009 (the "Effective Date") pursuant to the shareholder-approved Plan of Complete Liquidation and Dissolution. The Company expects to pay this liquidating distribution in cash on or about December 15, 2009.
As previously disclosed, on June 12, 2009 the Company filed Articles of Dissolution with the Secretary of State of the State of Washington in accordance with the Company's Plan of Dissolution. The Articles of Dissolution became effective, and the Company became a dissolved corporation under Washington law, on the Effective Date.
Subsequent to the filing of the Articles of Dissolution, the Company's common stock was delisted from the NASDAQ Global Market on the Effective Date at which time the Company instructed its transfer agent to close the Company's stock transfer records and to no longer recognize or record any transfers of shares of the common stock after such date except by will, intestate succession or operation of law. On July 15, 2009, the Company paid an initial liquidating distribution of $2.06 per share to the shareholders of record of common stock as of the Effective Date.
Pursuant to the provisions of Washington law, the Company plans to retain the remaining assets of the Company to satisfy and make reasonable provision for the satisfaction of current, contingent or conditional claims and liabilities of the Company. After satisfaction of any such current, contingent or conditional claims and liabilities, remaining assets, if any, will be distributed at such time as the Company's board of directors determines that it is appropriate. The amount and timing of a final distribution, if any, will be at the discretion of the Company's board of directors.
Easterntunder; Sorry for repeats.. U can delete them..
Were they sorry that they called You?
Poor guy must have gotten an ear full … lol!
Won’t it be interesting to see if CYPB will delay response to the newest $4.25 offer until Wednesday, October 13th? What do you think, a quicker response or full utilization of the timeline Ramius set forth?
UPDATE 2-Ramius goes hostile for Cypress with sweetened bid
2:29 pm ET 09/15/2010- Reuters
* Begins cash tender of $4.25/shr, up from prior $4.00 * Offer at 21 pct premium to Tuesday close
* Cypress shares up 9 percent
(Recasts, adds analysts comments, updates share movement)
By Shravya Jain
BANGALORE, Sept 15 (Reuters) - Ramius LLC took a sweetened $164 million cash bid for Cypress Bioscience Inc <CYPB.O> directly to the U.S. drugmaker's shareholders, putting pressure on management to either negotiate a deal with the hedge fund or come up with an alternative plan.
Cypress has been facing shareholder revolt over its strategy since June, when it signed a deal to license a schizophrenia drug, which is both years out from reaching market and carries significant clinical risk.
The stock crashed 38 percent following the licensing deal, and since then at least one large shareholder, RA Capital, has come out in favor of a sale to Ramius.
Ramius -- which already controls about 10 percent of the company -- is now offering to pay Cypress shareholders $4.25 a share, a premium of 21 percent to Tuesday's close and 25 cents more than its previous bid.
On Aug. 6, Cypress had rejected Ramius' $4-a-share buyout proposal, saying it grossly undervalued the company.
"If there is somebody to be a white knight in this, the company that makes the most sense is company's partner for Savella -- Forest Labs," Gabelli & Co analyst Kevin Kedra said.
Forest Laboratories <FRX.N> promotes Savella, Cypress' drug for fibromyalgia -- a chronic pain condition -- in the United States.
(edit by Eastunder : Info on that available here)
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52948783&txt2find=forest
A DOLLAR SHORT
Still, any final deal may still be about a dollar away from Ramius' current bid.
"There's more value in the company than what (Ramius is) offering at this point. We would expect to ultimately see a higher number emerge," Gabelli & Co analyst Kevin Kedra said.
"If they realistically want to make this deal happen, they will have to raise this offer," he said, adding that $5 a share gets close to a fair value for the company.
Wednesday's offer price is 70 percent more than Cypress' trading levels immediately prior to Ramius initial bid, but still below the levels it was trading at before the licensing deal on the schizophrenia drug.
In a release, Cypress asked shareholders to take no action on the tender offer until it takes a formal position on the offer -- expected within ten working days.
The tender offer will expire at midnight, Eastern Time, on Oct. 13.
The offer is conditional to Ramius, a Cowen Group <COWN.O> company, gaining control of at least 90 percent of the total outstanding shares and Cypress having minimum $80 million in cash or cash equivalents, Ramius said.
Cypress shares were up 10 percent at $3.85 in afternoon trade on Nasdaq. (Reporting by Shravya Jain in Bangalore; Editing by Vinu Pilakkott, Anthony Kurian)
Some of those are on the board already. I was up early. :)
Sept. 15, 2010, 8:45 a.m. EDT ·
Cypress Bioscience rises 13% on upped buyout offer
NEW YORK (MarketWatch) -- Cypress Bioscience (CYPB 3.85, +0.34, +9.69%) rose 12.5% to $3.95 a share in pre-market trades on Wednesday. The move came after Ramius Value and Opportunity Advisors offered to buy the company for $4.25 a share in cash. Ramius raised its July 16 offer of $4 a share after Cypress rejected it.
Scov, with the news today about the hostile pressing forward, I guess we will see if RA Capital is correct about the feelings of the shareholders.
If they are correct they will rush to tender. If they are not - then the game continues.
It now comes down to how many people offer Ramius their shares. and in a way I can see why CYPB started buring thru the cash earlier.
I actually have been thru this once before. I ignored the process, then had a personal phone call, from the hostile, asking me to tender. I never laughed so hard in my life as it gave me a chance to voice my opinion verbally....which was a hoot! They eventually didn't get the numbers they were after and another company came in and saved the day. Not saying that will happen here, as I don't even see someone else indicating interest, but it certainly brings back fond memories.
If there is someone else interested I would imagine now is the time to come out of the woodwork because it's getting serious?
Easterntunder: Cypress set this thing up by buying couple of things recently to increase its sex appeal especially with anti-nicotin rights purchase from ALXA. Offer valid till oct 2010. Shareholders are not happy with CYPB's performance so far. May be CYPB may appeal to a second suitor since shareholders do not like $4.25 PPS offer since they are under water.
JMFHO
I'm eager to hear what Cypress has to say about all this.
What about you?
BACKGROUND OF THE OFFER. (From the tender offer. I just thought this was interesting for a time frame perspective)
Between May 27, 2010 and July 15, 2010, representatives of the Ramius Group attended certain investor presentations and conferences held by Cypress and met with members of Cypress’ management, including Chairman and Chief Executive Officer Jay D. Kranzler and Chief Financial Officer Sabrina Martucci Johnson, and discussed, among other things, Cypress’ current strategic plan involving early-stage acquisitions and certain recent transactions, including the license agreement with BioLineRx Ltd. in connection with the BL-1020 drug, the acquisition of Proprius and the co-promotion of Savella® with Forest Laboratories (the “Co-Promote”).
On July 19, 2010, the Ramius Group filed a Schedule 13D with the SEC indicating it owned 3,815,000 Shares as of July 16, 2010, representing approximately 9.9% of Cypress’ issued and outstanding Shares. The Ramius Group subsequently filed amendments to the Schedule 13D on each of July 22, 2010, August 6, 2010 and August 12, 2010.
On July 19, 2010, the Ramius Group delivered a letter (the “July 19 Letter”) to Cypress’ Board of Directors outlining an offer to acquire all of the outstanding Shares that the Ramius Group did not already own for $4.00 per Share in cash (the “Acquisition Offer”). The Acquisition Offer described in the July 19 Letter represented a 60% premium over the July 16, 2010 closing price and a 74% premium over the average closing price since the acquisition of BioLineRx’s BL-1020 drug. In addition to the all-cash Acquisition Offer, the Ramius Group also stated in the July 19 Letter that it would be willing to consider an acquisition structure that would allow management to continue the development of the recently acquired BL-1020 if it were able to fund the required financing for the Phase IIb trial itself or from a third party financing source. The letter stated that under this proposed structure management and third party financing could retain a 50% interest in BL-1020, with the other 50% interest retained on a pro-rata basis by Cypress’ existing stockholders. The Ramius Group stated in the letter that it believed that this structure would provide stockholders with immediate liquidity through an all-cash acquisition at a significant premium to the current stock price and provide stockholders with an opportunity to retain future upside potential from the development of BL-1020 without stockholders funding the risk.
In the July 19 Letter, the Ramius Group also called on Cypress’ Board of Directors to stop blindly following a management team that continued to destroy stockholder value by making increasingly risky investments with stockholder money and to immediately hire a reputable investment bank to evaluate the Ramius Group’s Acquisition Offer and to formally explore a sale of Cypress to maximize the value for all stockholders. The Ramius Group implored the Board to cease and desist from approving any further acquisitions and from entering into, or seeking or proposing to enter into, any further material transactions, licensing agreements or business combinations that could jeopardize the ability of stockholders to realize full and fair value for their investment. The Ramius Group also questioned whether the members of Cypress’ Board of Directors had breached their respective fiduciary duties to stockholders by continuing to approve highly speculative, overpriced, and value-destroying acquisitions that serve only to further entrench the existing management team and the Board of Directors.
On July 22, 2010, Value and Opportunity Fund delivered to Cypress a letter (the “July 22 Demand”) demanding, pursuant to Section 220 of the DGCL, inspection of certain of Cypress’ Books and Records (as defined therein). The Books and Records demanded in the July 22 Demand relate to, without limitation, certain decisions made by Cypress’ Board of Directors and management, particularly with respect to Cypress’ license agreement with BioLineRx Ltd.
In a letter dated July 29, 2010, Cypress rejected in its entirety the July 22 Demand.
On August 3, 2010, Cypress entered into a letter agreement (the “Letter Agreement”) with Forest Laboratories Holdings Limited (f/k/a Forest Laboratories Ireland Limited) (“Forest”) pursuant to which Cypress and Forest agreed to amend the License and Collaboration Agreement dated January 29, 2004 previously entered into between the parties (the “License and Collaboration Agreement”). Pursuant to the Letter Agreement, Cypress discontinued its rights under its agreement with Forest to co-promote Savella®. Forest agreed to pay to Cypress a one-time payment of $2.0 million to help facilitate the transition and Cypress retained all other rights and obligations under the License and Collaboration Agreement, including its royalty on Savella® sales.
On August 5, 2010, the Ramius Group received a letter from the Board informing the Ramius Group that the Board of Directors had unanimously decided not to accept the Ramius Group’s Acquisition Offer.
On August 5, 2010, the Ramius Group delivered a letter (the “August 5 Letter”) to the Board of Directors highlighting its serious concerns regarding Cypress’ announced discontinuation of the Co-Promote. In the August 5 Letter, the Ramius Group questioned why Cypress’ Board of Directors entered into a transaction to discontinue the Co-Promote for only $2 million without first receiving advice from the two investment banking advisors it had engaged on the value and strategic merits of the Co-Promote and the impact of its termination on the Ramius Group’s Acquisition Proposal or other strategic alternatives available to Cypress. The Ramius Group also again implored the Board of Directors to refrain from taking further actions or entering into any further transactions at that time.
Additionally, the Ramius Group stated in the August 5 Letter that it expected the Board of Directors to fulfill its fiduciary responsibility by fully evaluating the Ramius Group’s Acquisition Offer of $4.00 per share, which represented a 60% premium to the closing price of the Shares on the day prior to the announcement of its acquisition offer. Ramius went on to say that it was willing to work with Cypress to consummate a transaction in one of two ways; (1) by entering into a definitive agreement with Cypress to purchase Cypress for a fully financed and agreed upon price that would allow for a “go shop” period such that Cypress could fulfill its fiduciary duty to determine if there were higher offers from other bidders; or (2) by participating in a formal auction process alongside other potential acquirers.
On August 5, 2010, Value and Opportunity Fund delivered to Cypress a letter (the “August 5 Demand”) demanding, pursuant to Section 220 of the DGCL, inspection of certain of Cypress’ Books and Records (as defined therein). The Books and Records in the August 5 Demand relate to, without limitation, certain decisions made by the Board of Directors and management, particularly with respect to the termination of the Co-Promote. The August 5 Demand was separate and distinct from the prior July 22 Demand.
Cypress has not responded to the August 5 Demand and has not provided the Books and Records requested therein.
On August 11, 2010, the Ramius Group delivered a letter (the “August 11 Letter”) to the Board of Directors expressing that it remained committed to pursuing an acquisition of Cypress and was willing to consider raising the value of its acquisition proposal in the event that the Ramius Group was granted limited due diligence and Cypress agreed to negotiate in good faith to consummate a transaction. The Ramius Group further stated that it believed Cypress’ current strategy would destroy significant stockholder value and criticized Cypress for hiding behind self-serving and inaccurate statements concerning the Ramius Group’s proposal.
The August 11 Letter further stated that the Ramius Group had heard from several stockholders who want maximum value for their shares now through a negotiated transaction and would prefer for Cypress to explore a sale rather than have management continue with its current strategy. The Ramius Group concluded the August 11 Letter by stating that it remained ready, willing and able to engage in meaningful negotiations with Cypress to structure a transaction that would maximize value for all stockholders.
The Board delivered a letter dated August 17, 2010 to the Ramius Group again declining to accept the Ramius Group’s Acquisition Offer and announcing Daniel H. Petree as the new lead independent director.
On August 18, 2010, Cypress announced the resignation from the Board of Directors of Jean-Pierre Millon, effective immediately, due to “a difference of opinion with respect to the timing of the execution of [Cypress’] strategy.”
On or about August 18, 2010, Value and Opportunity Fund filed a complaint (the “Complaint”) in the Court of Chancery of the State of Delaware against Cypress seeking certain of Cypress’ Books and Records (as defined therein) pursuant to Section 220 of the DGCL. Value and Opportunity Fund filed the Complaint after Cypress rejected Value and Opportunity Fund’s demands for Cypress Books and Records relating to Cypress’ decision to: (a) enter into an exclusive North American license to develop and commercialize an antipsychotic drug owned by BioLineRx Ltd.; and (b) terminate the Co-Promote (collectively, the “Transactions”). The Complaint alleges, among other things, that the Ramius Group is entitled to inspect the Books and Records to investigate potential mismanagement, wrongdoing and/or waste of corporate assets in connection with the Transactions.
On August 19, 2010, Cypress notified The Nasdaq Stock Market that it was not in compliance with NASDAQ Marketplace Rule 5605(c)(2)(A), which requires an issuer to, among other things, have an audit committee comprising at least three independent directors, due to the resignation of Mr. Millon from the Board and from the Audit Committee of the Board.
On August 25, 2010, the Ramius Group sent a letter (the “August 25 Letter”) to the newly appointed lead independent director expressing its concerns regarding the abrupt resignation from the Board of former lead independent director Jean-Pierre Millon and the further concentration of control of Cypress with two individuals, Jay Kranzler and Daniel H. Petree. The August 25 Letter detailed that Mr. Petree already served as the sole member of the Finance Committee, giving him the sole authority to evaluate, review, facilitate and approve the selection and engagement of financial advisors in connection with strategic transactions, licenses, joint ventures, acquisitions and other similar transactions, and that Mr. Petree and Dr. Kranzler, the CEO of Cypress, were the only two members of the Strategic Committee, which meets with and advises management as Cypress considers product licensing, potential acquisitions and other strategic opportunities. In the August 25 Letter, the Ramius Group noted the error of concentrating control of Cypress with just two members of a seven person board in the midst of an acquisition proposal, when it is most important for the Board to act independently of management.
Additionally, the Ramius Group noted in the August 25 Letter that the fact that Mr. Millon felt compelled to resign from the Board of Directors called into serious question the Board of Director’s true independence and balance. The Ramius Group expressed its opinion that a director expressing a differing view was forced to relinquish his leadership role on the Board and subsequently chose to resign from the Board, and that, at best, this demonstrates an unhealthy board environment and, at worst, it is symptomatic of a truly dysfunctional board that continued to act without regard to the best interests of stockholders. The Ramius Group concluded the August 25 Letter by confirming its commitment to pursue an acquisition of Cypress, repeating its willingness to consider raising the value of the Ramius Group’s Acquisition Offer in the event the Ramius Group was granted limited due diligence and Cypress agreed to negotiate in good faith and requesting an in-person meeting with any or all of the continuing independent members of the Board.
On August 26, 2010, Cypress entered into a license and development agreement (the “License and Development Agreement”) with Alexza Pharmaceuticals, Inc. (“Alexza”), pursuant to which Cypress obtained an exclusive worldwide license from Alexza under certain patents and know-how to Alexza’s Staccato nicotine technology. As consideration for the license, Cypress made an upfront payment of $5.0 million to Alexza. In addition, following the completion of certain clinical milestones relating to the Staccato nicotine technology, Cypress will be obligated to pay to Alexza an additional technology transfer payment of $1.0 million in consideration for the transfer to Cypress by Alexza of certain additional know-how and materials relating to the technology then in Alexza’s possession. Cypress is obligated to reimburse Alexza’s costs and expenses to conduct activities under a development plan agreed upon by the parties and to use commercially reasonable efforts to research, develop and commercialize the product. Cypress disclosed that it anticipates that it will spend approximately $4.0 million in connection with the development of the Staccato nicotine technology during 2010 and that it will spend approximately $7.0 million in connection with the development of the Staccato nicotine technology during 2011.
Also, on August 26, 2010, Cypress disclosed that it had completed the acquisition of Marina Biotech, Inc.’s (“Marina”) carbetocin development program pursuant to an asset purchase agreement dated August 25, 2010 (the “Asset Purchase Agreement”). The assets purchased under the Asset Purchase Agreement included intellectual property, product data and contracts related to Marina’s carbetocin development program for the treatment of the core symptoms of autism. Cypress disclosed that it made an initial payment of $750,000 to Marina as a portion of the purchase price. Following successful completion of specified patent issuance and late-stage development and commercial events relating to the carbetocin program, Cypress will be obligated to pay to Marina additional milestones of up to $27 million in the aggregate. In the event that Cypress commercializes a product containing carbetocin, Marina will be entitled to receive a percentage of net sales so long as a valid claim of an issued patent within the purchased assets exists, which obligation will terminate upon the entry of a generic product.
TENDER OFFER STATEMENT [img][/img]
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7151709
So lets see if I have this correct:
The deal:
$164 million cash bid for Cypress Bioscience Inc (CYPB.O)
The offer is conditional to Ramius gaining control of at least 90 percent of the total outstanding shares and Cypress having minimum $80 million in cash or cash equivalents, Ramius said.
So... from the tender offer under the summary term sheet page ii
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7151709
Yes. We will need approximately $148 million to purchase all Shares pursuant to the offer not already owned by Ramius and certain of its affiliates
OH. THAT'S RIGHT. They don't need to rebuy their shares. LOL
So for 148 million (Not really the 164 million at first glance, right?) - they get the company and 80m in cash/cash equivilents.
Gee: What's up with my fuzzy math? Perhaps I need more coffee BUT
That almost sounds like they are really paying only 68 million for the company, and the pipeline?
What will Wellington Management think of that? They own 14% of the outstanding shares and are listed as the larget shareholder according to this...
http://seekingalpha.com/article/222814-cypress-risks-deepening-disquiet-with-another-spending-spree?source=yahoo
Cypress Bioscience rises 13% on upped buyout offer
http://www.marketwatch.com/story/cypress-bioscience-rises-13-on-upped-buyout-offer-2010-09-15?siteid=yhoof2
NEW YORK (MarketWatch) -- Cypress Bioscience /quotes/comstock/15*!cypb/quotes/nls/cypb (CYPB 3.89, +0.38, +10.83%) rose 12.5% to $3.95 a share in pre-market trades on Wednesday.
The move came after Ramius Value and Opportunity Advisors offered to buy the company for $4.25 a share in cash. Ramius raised its July 16 offer of $4 a share after Cypress rejected it.
Cypress Bioscience Board of Directors to Review Unsolicited Tender Offer from Ramius LLC
Stockholders Advised to Take No Action Pending Review
Press Release Source: Cypress Bioscience, Inc. On Wednesday September 15, 2010, 9:18 am
SAN DIEGO, Sept. 15 /PRNewswire-FirstCall/ -- Cypress Bioscience, Inc. (Nasdaq:CYPB - News) ("Cypress") today confirmed that Ramius LLC ("Ramius") has commenced an unsolicited tender offer to acquire all outstanding common shares of Cypress at a price of $4.25 per share in cash.
Consistent with its fiduciary duties and as required by applicable law, the Cypress Board of Directors will review the offer to determine the course of action that it believes is in the best interests of the Company and its stockholders. Cypress stockholders are advised to take no action at this time pending the review of the tender offer by the Cypress Board of Directors.
Jefferies & Company, Inc. and Perella Weinberg Partners are serving as financial advisors to Cypress and Cooley LLP and Potter Anderson & Corroon LLP are serving as its legal advisors.
The Cypress Board of Directors, in consultation with its independent financial and legal advisors, intends to advise stockholders of its formal position regarding the offer within ten business days by making available to stockholders and filing with the Securities and Exchange Commission a solicitation/recommendation statement on Schedule 14D-9.
About Cypress Bioscience
Cypress Bioscience is a pharmaceutical company dedicated to the development of innovative drugs targeting large unmet medical needs for patients suffering from a variety of disorders of the central nervous system. Since 1999, Cypress has received multiple FDA approvals, including for Prosorba™, a medical device for rheumatoid arthritis, and Savella® (milnacipran HCl), for fibromyalgia. The Company focuses on generating stockholder value by reaching clinical development milestones as quickly and efficiently as possible. Cypress' currently marketed products include Savella and the Avise PGSM and Avise MCVSMtherapeutic monitoring, diagnostic and prognostic testing services for rheumatoid arthritis. Development-stage assets include CYP-1020 for cognitive impairment in schizophrenia, Staccato® nicotine for smoking cessation, intranasal carbetocin for autism, and AVISE-SLESM, a lupus diagnostic testing service. More information on Cypress and its products and development assets is available at http://
UPDATE 1-Ramius goes hostile for Cypress with sweetened bid
Wed Sep 15, 2010 8:44am EDT
* Begins cash tender of $4.25/shr, up from prior $4.00 * Offer at 21 pct premium to Tuesday close
* Cypress shares up 13 pct premarket
Sept 15 (Reuters) - Hedge fund Ramius LLC took a sweetened $164 million cash bid for Cypress Bioscience Inc (CYPB.O) directly to the U.S. drugmaker's shareholders after the company rejected its previous bid in August.
Ramius will now pay Cypress shareholders $4.25 a share, a premium of 21 percent to Tuesday's close and 25 cents more than its previous bid.
On Aug. 6, Cypress had rejected Ramius' $4-a-share buyout proposal, saying it grossly undervalued the company. [ID:nSGE675061]
Wednesday's offer price is 70 percent more than Cypress' trading levels immediately prior to Ramius initial bid, but is still below the levels from three months ago.
The tender offer will expire at midnight, eastern time, on Oct. 13.
The offer is conditional to Ramius gaining control of at least 90 percent of the total outstanding shares and Cypress having minimum $80 million in cash or cash equivalents, Ramius said.
Cypress shares were up 13 percent at $3.96 in premarket trade on Nasdaq. (Reporting by Shravya Jain in Bangalore; Editing by Vinu Pilakkott)
I Agree!
Separately, easy access to the “net” and/or distribution of any one parties’ individual opinion/baggage is getting scary?
Damn, that reminds me of “ME”!! Negative bashing stocks... :o)
Anyway, You’re right. RC Cap has an agenda.
Good catch, J.
Sure sounds that way - but 'it's for the good of the shareholders'.
BTW - Never have I seen this action before.
Some CRAZY stuff in here.
Are they "appealing" to them ...or attacking each one personally and publically? Possibly even threatening them?
This to me was BAD with a capital B A D.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Appeal to Individual Board Members
We feel it is necessary to appeal to each of you individually to make sure that you understand that shareholders hold you personally responsible, as members of the Board and presumed fiduciaries, and that each of you will be to blame if you continue to allow the Company to neglect shareholders' best interests by spurning direct negotiations with interested potential acquirers such as Ramius.
Mr. Roger Hawley, you are currently the CEO of a private company, Zogenix, which has just filed an S-1 to go public. Zogenix, no doubt, has investors to whom you answer and whose interests you represent. You are also on the board of other companies that depend on the support of investors. What message are you sending current investors and prospective investors of all your other companies when, against the publicly expressed wishes of major shareholders of the Company, you continue to support a business plan for the Company that is preventing the Company's shareholders from realizing a return on their investment? The Company has for years now been wasting its resources on one failed in-licensed program after another, as was outlined clearly in Arcadia Capital Advisors's most recent letter (September 7, 2010) to the Board. Management has a track record that suggests to us that they have been running the company as their own personal non-profit CRO. We ask that you put a stop to this ongoing violation of Cypress shareholders' interests. If you do not, should current and future shareholders of Zogenix worry that the same thing is going to happen to them someday?
Dr. Amil Kalali, given your current role as Vice President of Medical and Scientific Services at Quintiles, a respected global CRO, we can appreciate that you are an insightful board member when it comes to matters of how to run clinical trials. We see from your bio that you sit on many scientific advisory boards and on the boards of non-profit organizations. But, from your bio, it would appear that serving on the Cypress board is among the first of your experiences as a fiduciary of a public company. We ask that you give very careful consideration to whether you are currently representing shareholders' best interests when you support the Company's plan to spend its cash and royalty stream on clinical programs. You must have a great appreciation for the risks of drug development. What we have tried to make clear in this letter is that the Company's shareholders do not want to see the Company risk its current cash and the value of its royalty stream on these programs. In light of this, why are you continuing to substitute your judgment for that of the shareholders' as to what is in their best interests?
Mr. Jon McGarity, your biography mentioned that you run EthiX Associates, which specializes in pharmaceutical business planning and strategy. You clearly understand the risks of drug development, the value of cash, and the importance of taking shareholders' perspective into account when risking their cash on drug development. You have the expertise to appreciate that Cypress could very well lose all of its cash and squander its royalty stream on these new programs that better capitalized companies were willing to pass on (Note: It is clear that Bioline, Alexza, and Marina had all shopped them around; all three are public companies eager to maximize value). CNS drugs, in particular, are extremely difficult to bring to market because of the high safety hurdles, difficultly in finding good animal models, and especially the subjective endpoints susceptible to placebo-effect. It's up to the management team to match the right investors with their plan. However, management does not have the support of the Company's shareholders, who would prefer to see management preserve cash and sell the Company. Maybe the key question is, if you bundled Cypress' three new drugs into a brand new company, would you be able to raise capital from new investors to fund further development? If you think so, then we urge you to spearhead this effort. However, the current shareholders are clearly distressed at the prospect of the Company pursuing this agenda using shareholders' current cash and royalty stream. While shareholders are unable to call a Special Meeting in which to voice their best interests, we are confident that, with your years of experience, you must have a good sense of what shareholders would say if you were to ask them. We therefore ask you to do the right thing and stop the Company from risking current shareholders' capital on these new programs and grant shareholders the opportunity to realize a return on their investment by selling the Company to Ramius or a higher bidder.
Dr. Perry Molinoff, your bio highlights your considerable experience in neuroscience and CNS drug development. We know you appreciate the risks involved in this field, especially since you also presided over the challenging development of Palatin's melanocortin agonist and the associated loss of shareholders' capital. We ask that you explain to your fellow board members the tremendous risks involved in each of the three programs that the company wants to pursue, including schizophrenia, smoking cessation, and autism. The last indication in particular may as well be a science project given the lack of validated endpoints and untested regulatory process. These indications do represent areas of great unmet need, but if pharmaceutical companies flush with cash did not see fit to spend a tiny fraction of their billions of dollars developing these drugs, why are you prepared to allow a small and clearly under-capitalized company like Cypress to spend what little cash it has on such risky programs? Why are you and the rest of the Board so willing to take the risk of supporting this strategy in the face of clear shareholder opposition? We ask that you participate in a frank and open discussion of the risks of pursuing CNS drug development with your fellow board members and then vote to allow shareholders to realize the upside of letting Ramius or a higher bidder acquire the company and dispatch the pipeline as they see fit; if those drugs have any value, someone else will bid on them.
Dr. Tina Nova, you serve on a number of boards and have been involved with many companies and therefore have the experience to know that supporting the Company's plan to spend shareholders' capital in the hope of hitting a home run despite the opposition of shareholders is a losing proposition. Any company looking for additional board members will consider the message it would be sending to its shareholders if it were to appoint a Cypress Board member. If you want that message to be that the Cypress Board knows the value of shareholders' capital and how not to waste it, then please consider that the proper course of action is to put a stop to the Company's wasteful strategy immediately and push through the sale of the Company.
Mr. Daniel Petree, your biography shows that you have experience in investment banking and manage a boutique firm, which no doubt gives you expertise in executing transactions not unlike the three Cypress recently completed. We assume that you supported the Bioline deal but didn't realize at the time that shareholders would disapprove of it and would vote against it by selling the shares to the point where the Company's enterprise value was negative. Now you know how unhappy shareholders are about the deal, which you and Jay Kranzler spearheaded as the only two members of both the Finance Committee and Strategic Committee, an arrangement we think was unwise and which the rest of the board should not have condoned. And now that you know, we believe that it is incumbent on you to serve as a proper fiduciary to your shareholders, even if that means voting in favor of making the best effort to sell the Company quickly and therefore negotiating with Ramius. If the assets you helped identify have clinical value, they will find a new home.
And finally, Dr. Jay Kranzler, it was our sincere hope that you would have done the right thing by entering into discussions with Ramius after their first letter and quickly sought other buyers. But the fact that you both rejected Ramius' request to enter into discussions and then in-licensed two more drugs demonstrated a shocking disregard of the interests of Cypress shareholders. You teach a course on the business of biotechnology at The Rady School of Management at UC San Diego and are its sole Executive in Residence; you could still be remembered as a recognized authority on the drug repurposing paradigm but if you continue down this path we think that you will most likely be remembered as a poignant business lesson to students and executives alike on what not to do when at the helm of a company. We wish your board had steered you better.
From our conversations with you over the years, we felt that you understood the importance of having a mandate from your shareholders to risk capital on drug development in a calculated and prudent manner. Instead, we have watched you steer Cypress towards excessively risky programs, squandering the resources of the Company, and cause the Company' stock to trade for less than cash value. This Company is not your personal non-profit research organization. Yes, it would be wonderful to find a treatment for autism, help people stop smoking, and give patients with schizophrenia respite from their debilitating symptoms. Under the right circumstances, we might have offered to provide funding to one or more of these programs provided the rest of the business plan were well thought out. But the Company only gets to pursue those goals if it first wins over the shareholders. Instead, you and the Company have been dismissive of the shareholders, not bothering to win their support for the Company's agenda. The fact that the Company's stock dropped as much as it did and stayed down for as long as it did after the Bioline announcement is proof that the Company does not have shareholders' support. The fact that shareholders sold the stock when they saw the Company in-license two more drugs after rejecting Ramius' offer was proof that they would have preferred that the Company negotiated with Ramius than pursue a scorched-earth policy, spending all the cash so that acquirers lose interest.
Brilliant!
And yes, as you suggest……
[Suppressed Sound Link]
:o)….Thanks for all You do, J!
Given the suggestions of sufficient cash on hand, monies that RA Cap mentions immediate distribution of to the shareholders instead of being used to invest in CYPB’s chosen field of operations/market, apparently they consider combo of $3.00/share plus that extra cash on hand would be enough to conclude a successful short term investment based on their $3.61/share average cost?
Hey, is not RA Cap basically suggesting that CYPB should liquidate, turn over both current and future cash to their investors and then go figure out something else to do for a living?
And food for thought - 7/19 was the same day we got the offer.
I smell bass.
Guess who Ramius is in bed with?
Awesome Job, Scov!
As always! :) You are the best spy I know of. LOL
With knowing all that - what would the motivation be behind this comment of theirs?
"However, even if the best offer the Company could come up with were as low as $3.00/share, taking this offer would represent a better outcome for all shareholders"
They don't really believe that.
Wow, such detail! I like your take on the matter, J.
Their aggressive pay now and to heck with CYPB Co.’s goals and objectives got me curious about the timing of RA Capital Management's investment in CYPB?
Looks that all shares currently held were just recently acquired between 7/19/2010 to 9/9/2010 for a total average PPS of... $7,598,192 / 2,107,392 shares = $3.6055/share. (total $ from page 5 of the 13-D)
My opinion and then I would love to hear yours or any one elses.
To the Board of Directors of Cypress:
We are a large stockholder of Cypress Bioscience, Inc. (the "Company"), having beneficial ownership over approximately 2,000,000 shares of the Company's outstanding common stock. We are writing in response to the Company's August 6, 2010 press release that publicly announced that the Board of Directors of the Company (the "Board") rejected the offer previously made by Ramius LLC ("Ramius") to purchase all of the issued and outstanding capital stock of the Company at a price of $4.00 per share. The Company's press release stated that the Board rejected the offer by Ramius because it was not in the best interests of all of the Company's stockholders and that the Company would continue to work with Jefferies & Company, Inc. and Perella Weinberg Partners to evaluate strategic alternatives.
(I agree with CYPB)
We consider the Company's stated objective, to "evaluate strategic alternatives", to be too vague for our comfort given that the Company has just rejected the opportunity to negotiate with a potential acquirer.
(How vague is - 'It's not enough?')
We would like to be explicit about what courses of action we would like the Company to take to represent our best interests so that the Company and the Board do not need to speculate on this matter. Certainly we do not speak for all stockholders but we are confident, given the recent trading history of Cypress stock, that many would agree with our position.
(If that was true you would have filled that large gap up, but you haven't)
We are confident that it would be in the best interests of all stockholders for the Company to enter into immediate negotiations with Ramius and any other party for an acquisition of the Company at a price of $4.00/share or higher. However, even if the best offer the Company could come up with were as low as $3.00/share, taking this offer would represent a better outcome for all shareholders, in our opinion, than continuing to spend the Company's remaining cash and royalty income on the current ill-conceived pipeline and on in-licensing new compounds.
(Whoa there, doggy. I know you are not speaking for the shareholders that recently bought and there were many if we created that gap. Nope... on the 3 buck concept! The game isn't played that way.)
If the Company or the Board decides to contemplate the Company's options for longer than an additional two weeks, we would like to see the Company stop all spending and distribute all current cash immediately to the Company's shareholders, keeping only enough to fund the auction of the Savella royalty, whose proceeds we would also want the Company to distribute as soon as possible.
(WOW... you own just over 5%: I'm thinking you are getting a little bossy under THOSE circumstances.)
If the Company and the Board are convinced that there is value in the Company's pipeline, the Company can try to raise additional capital from investors to fund the development of those programs but the Company most certainly does not have our support in spending the Company's existing cash or royalty income on these new programs.
(Why? Why TRY to raise money when they have the money?)
We think the Company and the Board will discover that there is just as little interest among investors in the Bioline drug when the Company is pitching the story as when Bioline was pitching it in the year preceding the Company's deal with them. The same is true for the other two assets the Company recently in-licensed.
We recognize that the Company and the Board may dismiss our letter in the same manner that the Company and the Board have dismissed Ramius on several occasions.
(Only once. CYPB responded to the first letter and has yet to respond to the second)
Therefore, we would like to take this opportunity to create a public record urging the Company and the Board not to do so and stating very clearly that this is not in the best interests of any of the Company's stockholders.
The Record
As of June 30, 2010, the Company had $2.73/share of cash, royalties exceeding $0.32/share expected over the next 12 months, and a plan to create additional value by spending the cash on new drug development.
However, in the month following the announcement of the Bioline licensing agreement (June 21, 2010), over 37 million shares representing the majority of the Company's float traded below $2.50/share, with 10 days of trading at or below $2.25, and the stock hit a low of $2.09. There is absolutely no question that the overwhelming vote of the shareholders during that period was that the Company had made a mistake. They assigned a negative (less than zero) value to the Company's pipeline and its business plan, and concluded that the Company had destroyed value by committing cash and future resources to the Bioline drug. We know this is what shareholders concluded because of the extensive, deliberate, and prolonged selling of shares by shareholders at a price that reflected a below-cash value of the whole company.
For an entire month, investors weighed the evidence and concluded that the Company and its pipeline were worth less than zero. Had the stock price recovered quickly, within a few days, one could have assumed that the drop in price was due to a transient inefficiency caused by a few investors not appreciating the merits of the licensing deal while savvier investors stepped in to snap up shares and bid them back up to pre-deal price. But to have such high volume selling at stock prices below the cash per share for such a long time is nothing short of damning.
(true. lol)
When on July 19, 2010 Ramius announced their desire to negotiate for an acquisition of Cypress for a price of $4.00/share, the stock rapidly rose to trade over $3.00/share, with 44 million shares trading at an average price of $3.52/share from July 19th through August 25th. Again, there can be no question that the majority vote of the shareholders during that period was that the prospect of being bought out by Ramius or anyone at $4.00/share or higher was more compelling than pursuing the Company's current business plan.
(BS. It was the possibility of a quick gain)
We consider the recent trading history of the stock to be clear evidence that shareholders thought that the Company had a positive enterprise value prior to the Bioline announcement, that it had a negative enterprise value after the Bioline announcement (anticipating that management would burn cash without creating value), and that the only way they will generate a return on their investment is if the Company were sold to Ramius or another acquirer.
In case there was any doubt, one can even see how on August 26th, immediately after the Company announced the in-licensing of two more drugs, the stock sold off again over several days with high volume. Given that Ramius has offered $4.00/share to buy the company, why would shareholders sell the stock on this news for as much as a 22% discount to this price (stock sold for a low of $3.13/share on August 31, 2010) unless, as a result of the news, they were now more fearful than before that management was intent on blocking the sale of the Company to Ramius or another suitor.
(Once again - Gap. Unfilled. IMHO, That doesn't back up the Fear factor)
The fact is that the Company's stock is now held to a large extent by shareholders who believe that there is more value in selling the Company to Ramius or a higher bidder in an expeditious manner than in letting the Company continue to operate as it has been. Management and the Board may think that many of these shareholders bought the stock recently and somehow their interests are less important than the interests of shareholders that the Company considers loyal to its long-term strategy. The fact is that a huge number of these "loyal" shareholders voted with their feet and couldn't sell their stock fast enough well under the $4.00/share Ramius is now offering for the Company.
Had you not disappointed those shareholders who believed your pipeline had value, they may have remained shareholders, you would have had a mandate to continue with your plans to operate the Company as you had been doing, and your stock would have reflected your shareholders' support of your plan by trading with a positive enterprise value.
(That's probably true)
But now, in light of the large trading volume in the stock since the Ramius offer was announced and the fact that the stock price traded up as a result of the Ramius offer, it is clear that many of your current shareholders actually bought stock thinking that it would be a good outcome if the Company were sold at a price of $4.00 per share or higher. The greatest fear of your current stockholders is that management and the Board might actually choose not to sell the Company at a price of $4.00 per share or higher and that all of the Company's cash will be spent on its pipeline. The Company now has a new set of shareholders who see value in a different strategy, and it is the fiduciary duty of the Board and management to consider their best interests.
(Wait? What happened to the "loyals? So it's now screw the remaining loyal shareholders and focus now on the buyout traders...okay. LOL! )
If management or the Board has any doubts that the Company's current shareholders want management and the Board to sell the company for $4.00/share or more to Ramius or another acquirer, then you should call a shareholder meeting and give everyone a chance to vote. But do not claim that rejecting any negotiations with Ramius is somehow in shareholders' best interests; negotiations with Ramius are exactly what shareholders want from management and the Board.
(No. Not I. I want CYPB to be offered a price that takes into account the pipeline, the case on hand and one from anyone other then Ramius - who can go....
elsewhere.)
Wow. LOL- I have a few issues with that letter but that can be another post.
So what do we have here? According to this:
==================================================================
RA Capital urges Cypress to find a buyer
RA Capital Healthcare urges Cypress Biosciences to negotiate with Ramius or find another buyer
On Monday September 13, 2010, 12:59 pm EDT
NEW YORK (AP) -- An investment fund which owns more than 5 percent of Cypress Bioscience Inc. shares urged the company's board to negotiate with spurned suitor Ramius, find another buyer or make a big cash distribution to shareholders.
The request came in a letter Monday from RA Capital Healthcare Fund LP, which owns about 2 million of Cypress' 38.6 million shares, to the San Diego company's board.
Ramius, which owns about 9.9 percent of Cypress, has offered $4 a share in cash for the rest of the company. Cypress has said the offer "grossly undervalues" the company.
The offer was initially made July 19. At the time, that was a premium of 60 percent to the stock's latest closing price of $2.50.
In Monday's letter, RA Capital urged Cypress to "engage in negotiations with Ramius, find another buyer, or make a significant cash distribution."
Cypress shares rose 2 cents to $3.41 in midday trading Monday after rising as high as $3.52 earlier in the day. Its high for the past year was $8.37 on Oct. 6, 2009.
=================================================================
Basically two entities who own apx. 15% of the outstanding shares putting up a fuss and telling CYPB what they ought to do. They feel they are speaking for the remaining 85% of the shareholders.
My question is.... Where are those shareholders? Where is their voice - or do they not have one?
They need more backing, imho, to make their point. It's not enough. They need to seek out others to follow their opinion. Maybe CYPB should look into a dislexia remedy? Because If they plan on turning this hostile - it's NOT going to take 15% - They are gonna need 51%
More letters to come?
RA..Capital Healthcare Fund, Issues Letter to CYPB Board
SCHEDULE 14A INFORMATION - http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7148183
RA Capital Healthcare Fund - SCHEDULE 13D (5.46% ownership) … http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7148179
RA Capital Healthcare Fund, LP Issues Letter to the Board of Cypress Bioscience
Monday , September 13, 2010 11:25ET
BOSTON--(BUSINESS WIRE)-- RA Capital Healthcare Fund, LP today announced that it has sent the Board of Directors of Cypress Bioscience, Inc. ("Cypress" or "the Company") (NASDAQ: CYPB) a letter urging that, to maximize stockholder value, they engage in negotiations with Ramius, find another buyer, or make a significant cash distribution. The text of the letter sent to the Cypress Board of Directors follows.
LETTER:
RA Capital Management, LLC
20 Park Plaza, Suite 905
Boston, MA 02116
September 13, 2010
TO: Mr. Roger L. Hawley
Dr. Amir Kalali
Dr. Jay D. Kranzler
Mr. Jon W. McGarity
Dr. Perry B. Molinoff
Dr. Tina S. Nova
Mr. Daniel H. Petree
To the Board of Directors of Cypress:
We are a large stockholder of Cypress Bioscience, Inc. (the "Company"), having beneficial ownership over approximately 2,000,000 shares of the Company's outstanding common stock. We are writing in response to the Company's August 6, 2010 press release that publicly announced that the Board of Directors of the Company (the "Board") rejected the offer previously made by Ramius LLC ("Ramius") to purchase all of the issued and outstanding capital stock of the Company at a price of $4.00 per share. The Company's press release stated that the Board rejected the offer by Ramius because it was not in the best interests of all of the Company's stockholders and that the Company would continue to work with Jefferies & Company, Inc. and Perella Weinberg Partners to evaluate strategic alternatives.
We consider the Company's stated objective, to "evaluate strategic alternatives", to be too vague for our comfort given that the Company has just rejected the opportunity to negotiate with a potential acquirer. We would like to be explicit about what courses of action we would like the Company to take to represent our best interests so that the Company and the Board do not need to speculate on this matter. Certainly we do not speak for all stockholders but we are confident, given the recent trading history of Cypress stock, that many would agree with our position.
We are confident that it would be in the best interests of all stockholders for the Company to enter into immediate negotiations with Ramius and any other party for an acquisition of the Company at a price of $4.00/share or higher. However, even if the best offer the Company could come up with were as low as $3.00/share, taking this offer would represent a better outcome for all shareholders, in our opinion, than continuing to spend the Company's remaining cash and royalty income on the current ill-conceived pipeline and on in-licensing new compounds. If the Company or the Board decides to contemplate the Company's options for longer than an additional two weeks, we would like to see the Company stop all spending and distribute all current cash immediately to the Company's shareholders, keeping only enough to fund the auction of the Savella royalty, whose proceeds we would also want the Company to distribute as soon as possible.
If the Company and the Board are convinced that there is value in the Company's pipeline, the Company can try to raise additional capital from investors to fund the development of those programs but the Company most certainly does not have our support in spending the Company's existing cash or royalty income on these new programs. We think the Company and the Board will discover that there is just as little interest among investors in the Bioline drug when the Company is pitching the story as when Bioline was pitching it in the year preceding the Company's deal with them. The same is true for the other two assets the Company recently in-licensed.
We recognize that the Company and the Board may dismiss our letter in the same manner that the Company and the Board have dismissed Ramius on several occasions. Therefore, we would like to take this opportunity to create a public record urging the Company and the Board not to do so and stating very clearly that this is not in the best interests of any of the Company's stockholders.
The Record
As of June 30, 2010, the Company had $2.73/share of cash, royalties exceeding $0.32/share expected over the next 12 months, and a plan to create additional value by spending the cash on new drug development.
However, in the month following the announcement of the Bioline licensing agreement (June 21, 2010), over 37 million shares representing the majority of the Company's float traded below $2.50/share, with 10 days of trading at or below $2.25, and the stock hit a low of $2.09. There is absolutely no question that the overwhelming vote of the shareholders during that period was that the Company had made a mistake. They assigned a negative (less than zero) value to the Company's pipeline and its business plan, and concluded that the Company had destroyed value by committing cash and future resources to the Bioline drug. We know this is what shareholders concluded because of the extensive, deliberate, and prolonged selling of shares by shareholders at a price that reflected a below-cash value of the whole company.
For an entire month, investors weighed the evidence and concluded that the Company and its pipeline were worth less than zero. Had the stock price recovered quickly, within a few days, one could have assumed that the drop in price was due to a transient inefficiency caused by a few investors not appreciating the merits of the licensing deal while savvier investors stepped in to snap up shares and bid them back up to pre-deal price. But to have such high volume selling at stock prices below the cash per share for such a long time is nothing short of damning.
When on July 19, 2010 Ramius announced their desire to negotiate for an acquisition of Cypress for a price of $4.00/share, the stock rapidly rose to trade over $3.00/share, with 44 million shares trading at an average price of $3.52/share from July 19th through August 25th. Again, there can be no question that the majority vote of the shareholders during that period was that the prospect of being bought out by Ramius or anyone at $4.00/share or higher was more compelling than pursuing the Company's current business plan.
We consider the recent trading history of the stock to be clear evidence that shareholders thought that the Company had a positive enterprise value prior to the Bioline announcement, that it had a negative enterprise value after the Bioline announcement (anticipating that management would burn cash without creating value), and that the only way they will generate a return on their investment is if the Company were sold to Ramius or another acquirer.
In case there was any doubt, one can even see how on August 26th, immediately after the Company announced the in-licensing of two more drugs, the stock sold off again over several days with high volume. Given that Ramius has offered $4.00/share to buy the company, why would shareholders sell the stock on this news for as much as a 22% discount to this price (stock sold for a low of $3.13/share on August 31, 2010) unless, as a result of the news, they were now more fearful than before that management was intent on blocking the sale of the Company to Ramius or another suitor.
The fact is that the Company's stock is now held to a large extent by shareholders who believe that there is more value in selling the Company to Ramius or a higher bidder in an expeditious manner than in letting the Company continue to operate as it has been. Management and the Board may think that many of these shareholders bought the stock recently and somehow their interests are less important than the interests of shareholders that the Company considers loyal to its long-term strategy. The fact is that a huge number of these "loyal" shareholders voted with their feet and couldn't sell their stock fast enough well under the $4.00/share Ramius is now offering for the Company. Had you not disappointed those shareholders who believed your pipeline had value, they may have remained shareholders, you would have had a mandate to continue with your plans to operate the Company as you had been doing, and your stock would have reflected your shareholders' support of your plan by trading with a positive enterprise value.
But now, in light of the large trading volume in the stock since the Ramius offer was announced and the fact that the stock price traded up as a result of the Ramius offer, it is clear that many of your current shareholders actually bought stock thinking that it would be a good outcome if the Company were sold at a price of $4.00 per share or higher. The greatest fear of your current stockholders is that management and the Board might actually choose not to sell the Company at a price of $4.00 per share or higher and that all of the Company's cash will be spent on its pipeline. The Company now has a new set of shareholders who see value in a different strategy, and it is the fiduciary duty of the Board and management to consider their best interests. If management or the Board has any doubts that the Company's current shareholders want management and the Board to sell the company for $4.00/share or more to Ramius or another acquirer, then you should call a shareholder meeting and give everyone a chance to vote. But do not claim that rejecting any negotiations with Ramius is somehow in shareholders' best interests; negotiations with Ramius are exactly what shareholders want from management and the Board.
Appeal to Individual Board Members
We feel it is necessary to appeal to each of you individually to make sure that you understand that shareholders hold you personally responsible, as members of the Board and presumed fiduciaries, and that each of you will be to blame if you continue to allow the Company to neglect shareholders' best interests by spurning direct negotiations with interested potential acquirers such as Ramius.
Mr. Roger Hawley, you are currently the CEO of a private company, Zogenix, which has just filed an S-1 to go public. Zogenix, no doubt, has investors to whom you answer and whose interests you represent. You are also on the board of other companies that depend on the support of investors. What message are you sending current investors and prospective investors of all your other companies when, against the publicly expressed wishes of major shareholders of the Company, you continue to support a business plan for the Company that is preventing the Company's shareholders from realizing a return on their investment? The Company has for years now been wasting its resources on one failed in-licensed program after another, as was outlined clearly in Arcadia Capital Advisors's most recent letter (September 7, 2010) to the Board. Management has a track record that suggests to us that they have been running the company as their own personal non-profit CRO. We ask that you put a stop to this ongoing violation of Cypress shareholders' interests. If you do not, should current and future shareholders of Zogenix worry that the same thing is going to happen to them someday?
Dr. Amil Kalali, given your current role as Vice President of Medical and Scientific Services at Quintiles, a respected global CRO, we can appreciate that you are an insightful board member when it comes to matters of how to run clinical trials. We see from your bio that you sit on many scientific advisory boards and on the boards of non-profit organizations. But, from your bio, it would appear that serving on the Cypress board is among the first of your experiences as a fiduciary of a public company. We ask that you give very careful consideration to whether you are currently representing shareholders' best interests when you support the Company's plan to spend its cash and royalty stream on clinical programs. You must have a great appreciation for the risks of drug development. What we have tried to make clear in this letter is that the Company's shareholders do not want to see the Company risk its current cash and the value of its royalty stream on these programs. In light of this, why are you continuing to substitute your judgment for that of the shareholders' as to what is in their best interests?
Mr. Jon McGarity, your biography mentioned that you run EthiX Associates, which specializes in pharmaceutical business planning and strategy. You clearly understand the risks of drug development, the value of cash, and the importance of taking shareholders' perspective into account when risking their cash on drug development. You have the expertise to appreciate that Cypress could very well lose all of its cash and squander its royalty stream on these new programs that better capitalized companies were willing to pass on (Note: It is clear that Bioline, Alexza, and Marina had all shopped them around; all three are public companies eager to maximize value). CNS drugs, in particular, are extremely difficult to bring to market because of the high safety hurdles, difficultly in finding good animal models, and especially the subjective endpoints susceptible to placebo-effect. It's up to the management team to match the right investors with their plan. However, management does not have the support of the Company's shareholders, who would prefer to see management preserve cash and sell the Company. Maybe the key question is, if you bundled Cypress' three new drugs into a brand new company, would you be able to raise capital from new investors to fund further development? If you think so, then we urge you to spearhead this effort. However, the current shareholders are clearly distressed at the prospect of the Company pursuing this agenda using shareholders' current cash and royalty stream. While shareholders are unable to call a Special Meeting in which to voice their best interests, we are confident that, with your years of experience, you must have a good sense of what shareholders would say if you were to ask them. We therefore ask you to do the right thing and stop the Company from risking current shareholders' capital on these new programs and grant shareholders the opportunity to realize a return on their investment by selling the Company to Ramius or a higher bidder.
Dr. Perry Molinoff, your bio highlights your considerable experience in neuroscience and CNS drug development. We know you appreciate the risks involved in this field, especially since you also presided over the challenging development of Palatin's melanocortin agonist and the associated loss of shareholders' capital. We ask that you explain to your fellow board members the tremendous risks involved in each of the three programs that the company wants to pursue, including schizophrenia, smoking cessation, and autism. The last indication in particular may as well be a science project given the lack of validated endpoints and untested regulatory process. These indications do represent areas of great unmet need, but if pharmaceutical companies flush with cash did not see fit to spend a tiny fraction of their billions of dollars developing these drugs, why are you prepared to allow a small and clearly under-capitalized company like Cypress to spend what little cash it has on such risky programs? Why are you and the rest of the Board so willing to take the risk of supporting this strategy in the face of clear shareholder opposition? We ask that you participate in a frank and open discussion of the risks of pursuing CNS drug development with your fellow board members and then vote to allow shareholders to realize the upside of letting Ramius or a higher bidder acquire the company and dispatch the pipeline as they see fit; if those drugs have any value, someone else will bid on them.
Dr. Tina Nova, you serve on a number of boards and have been involved with many companies and therefore have the experience to know that supporting the Company's plan to spend shareholders' capital in the hope of hitting a home run despite the opposition of shareholders is a losing proposition. Any company looking for additional board members will consider the message it would be sending to its shareholders if it were to appoint a Cypress Board member. If you want that message to be that the Cypress Board knows the value of shareholders' capital and how not to waste it, then please consider that the proper course of action is to put a stop to the Company's wasteful strategy immediately and push through the sale of the Company.
Mr. Daniel Petree, your biography shows that you have experience in investment banking and manage a boutique firm, which no doubt gives you expertise in executing transactions not unlike the three Cypress recently completed. We assume that you supported the Bioline deal but didn't realize at the time that shareholders would disapprove of it and would vote against it by selling the shares to the point where the Company's enterprise value was negative. Now you know how unhappy shareholders are about the deal, which you and Jay Kranzler spearheaded as the only two members of both the Finance Committee and Strategic Committee, an arrangement we think was unwise and which the rest of the board should not have condoned. And now that you know, we believe that it is incumbent on you to serve as a proper fiduciary to your shareholders, even if that means voting in favor of making the best effort to sell the Company quickly and therefore negotiating with Ramius. If the assets you helped identify have clinical value, they will find a new home.
And finally, Dr. Jay Kranzler, it was our sincere hope that you would have done the right thing by entering into discussions with Ramius after their first letter and quickly sought other buyers. But the fact that you both rejected Ramius' request to enter into discussions and then in-licensed two more drugs demonstrated a shocking disregard of the interests of Cypress shareholders. You teach a course on the business of biotechnology at The Rady School of Management at UC San Diego and are its sole Executive in Residence; you could still be remembered as a recognized authority on the drug repurposing paradigm but if you continue down this path we think that you will most likely be remembered as a poignant business lesson to students and executives alike on what not to do when at the helm of a company. We wish your board had steered you better.
From our conversations with you over the years, we felt that you understood the importance of having a mandate from your shareholders to risk capital on drug development in a calculated and prudent manner. Instead, we have watched you steer Cypress towards excessively risky programs, squandering the resources of the Company, and cause the Company' stock to trade for less than cash value. This Company is not your personal non-profit research organization. Yes, it would be wonderful to find a treatment for autism, help people stop smoking, and give patients with schizophrenia respite from their debilitating symptoms. Under the right circumstances, we might have offered to provide funding to one or more of these programs provided the rest of the business plan were well thought out. But the Company only gets to pursue those goals if it first wins over the shareholders. Instead, you and the Company have been dismissive of the shareholders, not bothering to win their support for the Company's agenda. The fact that the Company's stock dropped as much as it did and stayed down for as long as it did after the Bioline announcement is proof that the Company does not have shareholders' support. The fact that shareholders sold the stock when they saw the Company in-license two more drugs after rejecting Ramius' offer was proof that they would have preferred that the Company negotiated with Ramius than pursue a scorched-earth policy, spending all the cash so that acquirers lose interest.
To reiterate, we hope management and the Board will do the right thing and immediately negotiate with Ramius and others to sell the Company for the best price you can secure. Until such a transaction is consummated, we would like the Company to cut all spending on every pipeline program and conserve cash.
Sincerely,
RA Capital Healthcare Fund, L.P.
By: RA Capital Management, LLC, its general partner
Peter Kolchinsky
Managing Member
Cypress Bioscience Inks Deal
http://finance.yahoo.com/news/Cypress-Bioscience-Inks-zacks-105438400.html?x=0&.v=1
Zacks Equity Research, On Monday August 30, 2010, 12:07 pm EDT
Recently, Cypress Bioscience, Inc. (NasdaqGM: CYPB - News) announced that it has inked a deal with Marina Biotech, Inc. (NasdaqGM: MRNA - News). The deal, which allows Cypress to acquire Marina’s patent rights and technology for autism candidate, carbetocin, is expected to boost the central nervous system pipeline (CNS) at Cypress.
The asset purchase agreement will see Cypress making an upfront payment of $750,000 to Marina. However, the value of the deal can increase to $27 million subject to the attainment of certain late-stage clinical and regulatory milestones, including the approval of the candidate by the US Food and Drug Administration (FDA). Moreover, Cypress will be responsible for financing all continuing development activities and will pay single-digit royalties to Marina on sales of the drug, if it hits the market.
Carbetocin, an intranasal therapy, is a long-acting analog of oxytocin. Oxytocin refers to hormone produced naturally that may benefit patients suffering from autism. The candidate has completed early-stage studies.
Apart from the asset purchase agreement, Cypress also announced another deal whereby Alexza Pharmaceuticals, Inc. (NasdaqGM: ALXA - News) licensed its Staccato nicotine technology to Cypress. The technology refers to a novel electronic multidose delivery system, which is designed to help people quit smoking.
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 believe that the recently signed deals are in line with Cypress’ strategy to grow through acquisitions and in-licensing opportunities.
Cypress Risks Deepening Disquiet With Another Spending Spree
by: EP Vantage August 30, 2010
http://seekingalpha.com/article/222814-cypress-risks-deepening-disquiet-with-another-spending-spree?source=yahoo
One could be forgiven for thinking it rather provocative that a board under fire for an apparently misguided license deal should go straight out and strike two more. Perhaps a sign of single mindedness is exactly the message that Cypress Bioscience (CYPB) is trying to send to its activist hedgefund shareholder, Ramius.
After Cypress’ share price halved in value to $2.16 in the wake of a licensing deal over BioLineRx’s antipsychotic CYP-1020 (BL-1020) in June, Ramius ramped up its vociferous calls for change and offered to buy the company for $4 per share, rather than see more money wasted (Ramius fires warning shot across Cypress’s bow, July 20, 2010). Rather than negotiate, Cypress has bought rights to two early-stage projects, Alexza Pharmaceuticals’ (ALXA) Staccato nicotine drug delivery platform, and autism drug carbetocin from Marina Biotech. Some analysts reckon these deals signal Cypress’ intention to press ahead unabated. The question for shareholders is whether this is a viable vision for the future.
Lots of cash and little assets
Cypress has licensed the smoking cessation technology and phase I autism drug, in deals potentially worth $6m and $27.75m, respectively, to grow its central nervous system-(CNS) focused portfolio. Analysts from Roth Capital estimate the company could spend about $17m developing the Staccato technology, and maybe $2m for carbotecin, over the next two years.
At the end of June, Cypress had $106m in cash. It receives a royalty stream from Forest Laboratories (FRX) for the fibromyalgia candidate Savella, predicted to bring in $17m this year, climbing to $81m in 2016. It also has two diagnostic services, which last year cost more to run than the income they generated.
So, the California firm has the recently in-licensed assets and a pile of cash. With no other obvious reason to acquire, Ramius appears to believe it knows how all that money could be better spent.
With a current market cap of $132m, removing the cash from this valuation gives an unspectacular $26m enterprise value. The stock market also appears to hold little faith in current management.
Fuelling dissent
The question for shareholders is whether to ride out this saga. Analysts at Roth reckon the shares could be worth $5 or more, and that even if these latest two deals amount to nothing but a waste of expenditure, it would only equate to a 50 cent per share erosion of value.
It does seem unlikely that an acquisition could happen at the current offer. At the very least the largest shareholder, Wellington Management with a 14% stake, would be unhappy with $4 per share.
However, of greater concern is the dissent that this apparently nonchalant move could cause amongst the remaining Cypress shareholders.
“[Cypress’] actions reminds us of the foreign tourist who simply speaks louder when not being understood by the native population,” Scott Henry, an analyst at Roth Capital, wrote in a research note Thursday. "At some point, shareholders and management must get on the same page - which is looking less likely without changes to one side or the other."
Ramius has asked to meet with the Cypress board, adding that it would consider raising its proposed takeover bid if allowed limited due diligence, or if some of the risk of the CYP-1020 deal could be offset by bringing in a third party to cover half of its development costs. The Cypress board has offered no indication that it plans to hold such a meeting.
As it stands, Cypress bosses have essentially said they know what is best for the company. The 41% decline in its stock price this year suggests investors do not agree. Something has to give.
Marina Biotech sells autism-treatment asset in deal worth up to $27M
Puget Sound Business Journal (Seattle)
http://seattle.bizjournals.com/seattle/stories/2010/08/23/daily27.html?ana=yfcpc
Cypress Bioscience Inc.
(I should have highlighted this on the first report...because that's a pretty good deal)
Marina Biotech Inc., which used to be known as MDRNA, said it’s sold patent rights and technology related to its Carbetocin asset for $750,000 upfront in a deal that could be worth up to $27 million.
The Bothell biotech (NASDAQ: MRNA) sold the asset to Cypress Bioscience Inc. (NASDAQ: CYPB) of San Diego. Cypress will be responsible for the future development of Carbetocin, which Cypress describes as “a potential breakthrough treatment for the core symptoms of autism.” Cypress also could pay Marina Biotech royalties on commercial sales of Carbetocin.
“The sale of our Carbetocin assets to Cypress is another example of our efforts to monetize the legacy assets of our predecessor company,” said J. Michael French, president and CEO of Marina Biotech, referring to the assets of Nastech Pharmaceuticals, the predecessor company to Marina.
I don't know? I'm curious to see what happens. :)
I agree, and the “market” rather KISS right now as you mention is being shown by the PPS.
CYPB has apparently made the decision not to make this a short-term sale? Will we see mid $4s by ……”Trick or Treat” ?
Easttunder; thnx. Any idea about their burn rate annually?
tia
GL
mlkr
From their last 10Q looks to be about $105.5 million.
http://www.sec.gov/Archives/edgar/data/716054/000095012310075009/a56962e10vq.htm
Liquidity and Capital Resources
At June 30, 2010, we had cash, cash equivalents and short-term investments of $105.5 million compared to cash, cash equivalents and short-term investments of $141.7 million at December 31, 2009. Working capital at June 30, 2010 totaled $135.9 million (including restricted cash of $30.0 million) compared to $140.5 million at December 31, 2009. We have invested a substantial portion of our available cash in money market funds, marketable debt instruments of governmental agencies and corporate debt securities. We have established guidelines relating to our investments to preserve principal and maintain liquidity.
Net cash used in operating activities as disclosed in our Condensed Consolidated Statement of Cash Flows was $5.3 million for the six months ended June 30, 2010 compared to net cash provided by operating activities of $6.7 million for the six months ended June 30, 2009. The primary source of cash from operations during the six months ended June 30, 2010 was commercial revenues, including royalty revenue and the co-promotion reimbursement received from Forest Laboratories, offset by cash used in operations including $4.2 million for changes in operating assets and liabilities and non-cash charges of $5.2 million. The primary source of cash from operations during the six months ended June 30, 2009 was the $25.0 million milestone payment and the $6.5 million reimbursement of expenses received from Forest Laboratories, offset by cash used in operations including $4.7 million for changes in operating assets and liabilities (excluding impact of initial deferred revenue amount from milestone payment) and non-cash charges of $5.5 million.
Net cash used in investing activities as disclosed in our Condensed Consolidated Statement of Cash Flows was $25.0 million for the six months ended June 30, 2010 compared to net cash provided by investing activities of $3.8 million for the six months ended June 30, 2009. The fluctuation in net cash from investing activities resulted primarily from the $30.0 million upfront payment in connection with the BioLineRx license agreement, which has been placed in escrow pending receipt of satisfactory OCS consent and effectiveness of the license agreement, as well as timing differences in investment purchases, sales and maturities and the fluctuations in our portfolio mix between cash equivalents and short-term investment holdings. We expect similar fluctuations to continue in future periods.
As disclosed in our Condensed Consolidated Statement of Cash Flows, we had no cash from financing activities for the six months ended June 30, 2010 compared to $0.4 million for the six months ended June 30, 2009. The decrease in net cash provided by financing activities during the six months ended June 30, 2010 compared to the corresponding prior year period was primarily the result of no exercises of stock options during the six months ended June 30, 2010 compared to proceeds of approximately $0.4 million from the exercise of stock options during the six months ended June 30, 2009.
Eastunder ; CYPB very aggressive purchase strategy.. Bought 2 rights in 2 days row.. Amazing.. One from MRNA that i follow.. What is cash situation of CYPB?
GL
I'm leaning towards Ramius's thought patterns on him leaving because he wasn't on the same page as the others....especially after seeing these new PR's.
I'm curious if any of this makes them more attractive to someone else? Or less atrractive. Market isn't initially happy.
Thanks :o)..Wonder if this helps to answer questions regarding “Lead Independent Director Jean-Pierre Millon’s abruptly resigning from the Board last week”?
Thinking it may perhaps help Ramius understand that he simply wanted to exit while he still had some brain cells left …. LOL!! And or perhaps there was no finanical reasons for him to take on these new matters, etc.
Interesting chain of events.
There will be another letter from Ramius over these new PR's. Plus CYPB has not responded to the last letter from them.
Such drama! :) Don't you love this stuff!
I removed your duplicate already. :)
I thought I could take the PR's off of knobias this morning, post them and then come back and place the links in them. Oddly - it confused me greatly. LOL
So one of those mornings. :)
Good morning back at ya!
LOL, we were typing at the same time...great minds, aye?
Feel free to delete this post for sure, which posted twice, as well as my prior one which is a link'y post to the info that you have actually displayed.
Oh and btw...good morning, J
:o)
Thanks. Much easier than what I was working on. I would imagine this news will flip Ramius's lid! More spending by CYPB.
It just get curiouser and curiouser.
Warm? This morning it's getting hot!
The object of Ramius’s desire continues to evolve.
08/26/2010 (08:00 ET) Marina Biotech Sells Carbetocin Asset to Cypress Bioscience - Market Wire ... http://www.knobias.com/story.htm?eid=3.1.feda080fa18bae594d50cdb55129f5ca62975c41be637fe37aaec6a29dfc993f
08/26/2010 (08:00 ET) Cypress Bioscience Licenses Alexza Pharmaceutical's Staccato(R) Nicotine - Market Wire .... http://www.knobias.com/story.htm?eid=3.1.3061d6b630120f45e6c7568c26f2da76b0e41305cc3320d58e11dd5717bc659f
08/26/2010 (08:00 ET) Cypress Bioscience Acquires Novel Intranasal Carbetocin Therapy for Autism - Market Wire ... http://www.knobias.com/story.htm?eid=3.1.6d16fc6da3c5749b6c0a76cf9cc5263d40346e59509856d567ed62825419dc7f
08/26/2010 (08:05 ET) CYPB: Filed New Form 8-K, Material Event Disclosure - Edgar ... http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7124516
CYPB is pushing those PR's this morning.
(more on) Alexza's Staccato® Nicotine Licensed to Cypress Bioscience
http://www.knobias.com/story.htm?eid=3.1.2d44764fb83df1297fc201c3322073c61969938f089161b7356eaf166864b97c
Thursday , August 26, 2010 08:05ET
MOUNTAIN VIEW, Calif., Aug. 26 /PRNewswire-FirstCall/ -- Alexza Pharmaceuticals, Inc. (Nasdaq: ALXA) announced today that it has licensed its Staccato nicotine technology to Cypress Bioscience, Inc. (Nasdaq: CYPB). The Staccato nicotine technology is a novel electronic multidose delivery system designed to help people stop smoking. The Staccato nicotine technology is intended to improve on a well-validated smoking cessation approach by delivering nicotine via inhalation, mimicking the nicotine effects of smoking without the harmful side effects associated with cigarettes.
"The Staccato system is a broad technology platform and Alexza has more Staccato-based product candidates than we can currently afford to develop on our own. In early July, we outlined our strategy to advance Staccato-based product candidates into development through self-funding and through collaborations," said Thomas B. King, Alexza President and CEO. "Today's announcement of the licensing of our Staccato nicotine technology to Cypress, along with our recently announced plans to advance AZ-007 (Staccato zaleplon) into Phase 2 clinical development, are examples of our execution of this dual-tracked development strategy."
Financial Information
According to the terms of the agreement, Cypress will pay Alexza an upfront payment of $5 million to acquire the worldwide license for the Staccato nicotine technology. In addition, following the completion of certain preclinical and clinical milestones relating to the Staccato nicotine technology, Cypress will be obligated to pay to Alexza an additional technology transfer payment of $1 million. Alexza will have a carried interest of 10% (subject to adjustment in certain circumstances) in the net proceeds of any sale or license by Cypress of the Staccato nicotine assets and the carried interest will be subject to put and call rights in certain circumstances.
Under the agreement, Cypress has responsibility for preclinical, clinical and regulatory aspects of the development of Staccato nicotine, along with the commercialization of the product. Alexza will execute a defined development plan for Cypress, culminating with the delivery of clinical trial materials for a Phase 1 study with Staccato nicotine.
About Staccato Nicotine
Staccato nicotine is designed to help smokers quit by addressing both the chemical and behavioral components of nicotine addiction by combining nicotine replacement via inhalation with a user-friendly drug delivery device. The Staccato technology may be capable of mimicking the pharmacokinetics of smoking cigarettes through the delivery of optimally-sized nicotine particles to the deep lung. Staccato nicotine may also provide some of the psychological aspects of smoking (e.g., hand-to-mouth movement, oral inhalation) and could allow smokers to self-administer and possibly titrate to the dose to treat cravings. Importantly, the electronics embedded within the Staccato delivery system could allow for the programmed, over-time reduction in the overall daily dose of nicotine, and ultimately may lead to the better management of nicotine cravings and eventual sustained smoking cessation.
About Alexza Pharmaceuticals, Inc.
Alexza Pharmaceuticals is a pharmaceutical company focused on the research, development and commercialization of novel, proprietary products for the acute treatment of central nervous system conditions. Alexza's technology, the Staccato system, vaporizes unformulated drug to form a condensation aerosol that, when inhaled, allows for rapid systemic drug delivery through deep lung inhalation. The drug is quickly absorbed through the lungs into the bloodstream, providing speed of therapeutic onset that is comparable to intravenous administration, but with greater ease, patient comfort and convenience. (Click here to see an animation of how the Staccato system works.)
AZ-004 (Staccato loxapine) is Alexza's lead program, which is being developed for the rapid treatment of agitation in schizophrenic or bipolar disorder patients. Alexza has completed and announced positive results from both of its AZ-004 Phase 3 clinical trials, submitted a New Drug Application in December 2009, and has a Prescription Drug User Fee Act (PDUFA) goal date of October 11, 2010. In February 2010, Alexza established a partnership with Biovail Laboratories International SRL, a subsidiary of Biovail Corporation, to develop and commercialize AZ-004 in the U.S. and Canada.
Alexza recently announced that it plans to advance AZ-007 (Staccato zaleplon) into Phase 2 clinical development, with the first Phase 2 clinical trial projected to begin in 1H 2011. AZ-007 is being developed for the treatment of insomnia in patients who have difficulty falling asleep, including those patients who awake in the middle of the night and have difficulty falling back asleep.
For more information about Alexza, the Staccato technology or the Company's development programs, please visit www.alexza.com.
Cypress Bioscience Licenses Alexza Pharmaceutical's Staccato(R) Nicotine
Thursday , August 26, 2010 08:00ET
http://www.knobias.com/story.htm?eid=3.1.3061d6b630120f45e6c7568c26f2da76b0e41305cc3320d58e11dd5717bc659f
SAN DIEGO, CA -- (Marketwire) -- 08/26/10 -- Cypress Bioscience, Inc. (NASDAQ: CYPB) today announced that it has licensed Alexza Pharmaceutical's (NASDAQ: ALXA) Staccato nicotine technology -- a novel electronic multidose delivery technology designed to help people stop smoking. The innovative Staccato nicotine technology is intended to improve on a well-validated smoking cessation approach by delivering nicotine via inhalation, thus mimicking the actual nicotine effects of smoking without the deleterious side effects associated with cigarettes.
Jay D. Kranzler, MD, PhD, Chairman and Chief Executive Officer of Cypress Bioscience, said, "We are pleased to expand our CNS pipeline with this novel Staccato nicotine technology. The electronics embedded within the Staccato delivery system allow for the programmed, over-time reduction of nicotine intake, and may ultimately lead to better management of nicotine cravings and sustained smoking cessation. Given that the vast majority of smokers trying to quit using existing therapies relapse within six months, we see great potential in this novel technology and we are excited about this transaction."
Kranzler continued, "Today's announcement demonstrates continued progress on our strategic plan to acquire and develop innovative CNS therapeutics that have the potential to address important unmet medical needs. Developing novel therapies such as effective nicotine replacement technology is consistent with our renewed focus on CNS drug development. We expect to take this technology into Phase 1 clinical trials in late 2011."
Neal Benowitz, MD, Professor of Medicine, Bioengineering & Therapeutic Sciences, University of California, San Francisco, and a specialist in nicotine addiction and smoking cessation, said, "A pulmonary nicotine delivery device, like Staccato nicotine, may be useful in addressing a pressing pharmacological problem in overcoming nicotine addiction; namely, that acute cravings during quit attempts are inadequately treated by current nicotine replacement therapies. A device that provides for rapid absorption of nicotine, combined with electronic controls to adjust doses to facilitate tapering and cessation, is an advancement that the field has been waiting for."
About Smoking
Despite decades of public health and medical intervention, smoking remains one of the most preventable causes of death in the United States(1). Smoking continues to exact a staggering toll on human health, claiming more than 430,000 lives annually in the U.S.(2,3) One in five deaths in the U.S. are attributable to smoking related illness(2,4). While the vast majority of smokers indicate an interest in quitting(5), approximately 80% of smokers who try to quit on their own relapse in one month, and only 3% will remain abstinent at six months(6). Current nicotine replacement therapies (nasal, buccal and transdermal), nicotinic agonists, and other prescription therapies approximately double the rates of abstinence as compared to placebo, but even so the vast majority of smokers using these treatments relapse within six months(7). The scientific community has called for the development of a pulmonary nicotine delivery system that more closely mimics the blood levels of nicotine produced through smoking, as such a system could be differentially effective in helping smokers to quit(7,8,9).
About Staccato Nicotine
Staccato nicotine is designed to help smokers quit by addressing both the chemical and behavioral components of nicotine addiction by combining nicotine replacement via inhalation with a user-friendly drug delivery device. The Staccato technology may be capable of mimicking the pharmacokinetics of smoking cigarettes through the delivery of optimally-sized nicotine particles to the deep lung. Staccato nicotine may also provide some of the psychological aspects of smoking (e.g., hand-to-mouth movement, oral inhalation) and could allow smokers to self-administer and possibly titrate to the dose to treat cravings. Importantly, the electronics embedded within the Staccato delivery system could allow for the programmed, over-time reduction in the overall daily dose of nicotine, and ultimately may lead to the better management of nicotine cravings and eventual sustained smoking cessation.
Financial Information
According to the terms of the agreement, Cypress will pay Alexza an upfront payment of $5 million to acquire the worldwide license for the Staccato nicotine technology. In addition, following the completion of certain clinical milestones relating to the Staccato nicotine technology, Cypress will be obligated to pay to Alexza an additional technology transfer payment of $1 million. Alexza will have a carried interest of 10% (subject to adjustment in certain circumstances) in the net proceeds of any sale or license by Cypress of the Staccato nicotine assets and the carried interest will be subject to put and call rights in certain circumstances.
About Alexza Pharmaceuticals
Alexza Pharmaceuticals is a pharmaceutical company focused on the research, development and commercialization of novel, proprietary products for the acute treatment of central nervous system conditions. Alexza's technology, the Staccato system, vaporizes unformulated drug to form a condensation aerosol that, when inhaled, allows for rapid systemic drug delivery through deep lung inhalation. The drug is quickly absorbed through the lungs into the bloodstream, providing speed of therapeutic onset that is comparable to intravenous administration, but with greater ease, patient comfort and convenience.
AZ-004 (Staccato loxapine) is Alexza's lead program, which is being developed for the rapid treatment of agitation in schizophrenic or bipolar disorder patients. Alexza has submitted a New Drug Application for AZ-004 and has a PDUFA goal date of October 11, 2010. For more information about Alexza, the Staccato technology or the Company's development programs, please visit www.alexza.com.
About Cypress Bioscience
Cypress Bioscience is a pharmaceutical company dedicated to the development of innovative drugs targeting large unmet medical needs for patients suffering from a variety of disorders of the central nervous system. Since 1999, Cypress has received multiple FDA approvals, including for Prosorba™, a medical device for rheumatoid arthritis, and Savella® (milnacipran HCl), for fibromyalgia. The Company focuses on generating stockholder value by reaching clinical development milestones as quickly and efficiently as possible. Cypress' currently marketed products include Savella and the Avise PG(SM) and Avise MCV(SM) therapeutic monitoring, diagnostic and prognostic testing services for rheumatoid arthritis. Development-stage assets include CYP-1020 for cognitive impairment in schizophrenia, as well as AVISE-SLE(SM), a lupus diagnostic testing service. More information on Cypress and its products and development assets is available at http://www.cypressbio.com/.
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