Zacks_Analysts' Blog : Cypress Bio Bought by Ramius - Analyst Blog

After months of wooing Cypress Bioscience (CYPB), Ramius LLC finally has reached an agreement with Cypress Bio's board. Cypress Bio entered into a definitive merger with Ramius V&O Acquisition LLC, an affiliate of Ramius and affiliates of Royalty Pharma.

Terms of the Agreement

Per the terms of the agreement, Ramius will acquire all outstanding shares of Cypress Bio that it does not already own at an increased price of $6.50 per share in cash. The deal has been valued at approximately $255 million.

Ramius has been looking to acquire Cypress Bio since July 2010. Ramius had initially approached Cypress Bio with an offer price of $4 per share in cash.

However, following the rejection of the initial offer, Ramius came back with a revised offer under which it proposed to pay Cypress Bio’s shareholders $4 per share in cash, along with the potential to retain a 50% interest in pipeline candidate CYP-1020.

This proposal, too, was turned down by Cypress Bio. Ramius subsequently launched an unsolicited tender offer to acquire Cypress Bio stock at a price of $4.25 per share.

Last week, Ramius came back with a revised offer of $5.50 per share. The final deal has been settled $6.50 per share and is scheduled to close by year-end/early January.

Product Portfolio at Cypress Bio

With this acquisition, Royalty Pharma will gain access to Cypress Bio’s Savella royalty stream. Savella, which is indicated for the treatment of fibromyalgia, is the only marketed product at Cypress Bio.

Savella has been developed under an agreement with Forest Labs (FRX) and Cypress Bio receives a 15% royalty on product sales. The company was previously co-promoting Savella with Forest Labs. However, the co-promotion agreement was terminated in August 2010.

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

Meanwhile, intranasal carbetocin, a long-acting analog of oxytocin, was acquired under an asset purchase agreement with Marina Biotech, Inc. (MRNA). The candidate is scheduled to move into clinical studies and results from a proof of concept study could be available within two years.

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