Biotech Values

[ghmm]

I have no position BUT this seemed interesting and relevant to the recent discussion on Cypress. iwfal appreciate your posts on the trials.

http://biz.yahoo.com/ap/070531/cypress_bioscience_hedge_fund.html?.v=1

Cypress Investor Opposes Stock Offering
Thursday May 31, 6:29 pm ET
Cypress Bioscience Hedge Fund Investor Asks Cypress to Abandon Public Offering

CHARLOTTE, N.C. (AP) -- A hedge fund investor on Thursday asked biotechnology company Cypress Bioscience Inc. to abandon its plans to sell 4.7 million new shares of stock in a public offering and instead institute a stock buyback program.

The hedge fund shareholder, called Black Horse Capital, issued a letter to Cypress's board of directors saying it does not think the proposed public offering is "in the best interest of shareholders."

The hedge fund said the company is having success with a new drug called Milnacipran, a treatment for fibromyalgia which is characterized by muscle pain and extreme tiredness. The fund added that since the drug is still in the testing phases, its value is not reflected in the stock price.

"Our major concern, is that Forest Laboratories, or some other smart strategic buyer will make a take out offer while your stock still is multiples away from reflecting the true value of your future milestone and royalty income for Milnacipran," the fund said in the letter. "The best thing that Cypress could possibly do with its cash is to buy back its own stock."

In the proposed public offering, the shares would be priced at $15.50, allowing Cypress to raise about $72.9 million. The company has said it will use the money to buy, license or invest in other companies, technologies or drugs.

Black Horse Capital owns about 1.2 million shares of the company's stock.

Cypress Shares fell 1 cent to $15.14 in electronic after-hours trading. During regular trading hours, the shares dropped $1.17, or 7.2 percent, to close at $15.14.