Cypress Bioscience is passing all U.S. marketing rights to its fibromyalgia drug Savella® over to current U.S. co-marketing partner Forest Laboratories, as part of a drastic cost-cutting exercise designed to save $10 million a year. Cypress confirmed that it also aims to either discontinue or sell its personalized medicine services business and slash its workforce by 86%. Job cuts will affect 123 employees. The announcement comes just over a month after the firm reported receiving an unsolicited $4 per share acquisition bid from Ramius, the alternative investment management business of Cowen Group. No action has yet been taken by Cypress following this offer.
Under terms of the transfer of Cypress’ U.S. Savella co-marketing rights the company will receive a one-time $2 million payment from Forest. It will also retain all other rights under the current agreement with its partner, including the receipt of royalties on Savella sales. Cypress said it could possibly look to rekindle a co-promotion agreement with Forest in the future.
Pulling out of the commercial market has been on the table for some while, Cypress admits, and will allow it to focus existing resources on CNS drug development, which is currently centered on the Phase II-stage schizophrenia candidate CYP-1020. Cypress negotiated a $30 million up-front deal for North American development and commercialization rights to the BioLineRx drug in June. CYP-1020 is a GABA-enhanced antipsychotic that combines dopamine antagonism with GABAergic activity.
Cypress is now looking for a buyer for its Avise personalized medicine services business, which currently comprises assays for diagnosing and monitoring lupus and rheumatoid arthritis. In the meantime the firm aims to stop actively marketing the service and ditch its sales operations. The firm stresses it will, however, continue to fulfill current clinician orders for the service. The Avise platform technology was acquired by Cypress from Cellatope in February 2009.
“While this type of action is very difficult, the board of directors and the management team believe it is in the best interest of Cypress’ shareholders that we preserve cash resources while focusing on our strongest opportunities for success,” states Jay D. Kranzler, M.D., chairman and CEO.
Cypress’ stock has dropped 37% over the last 52-week period, and currently sits at around $3.63 per share, with a 52-week high of $9.45 and a low point of $2.06. The firm recorded a net deficit of $28.25 million for the year ended December 31, 2009, on total revenues of $27.33 million. Cypress has a current market cap of some $139.3 million.