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Cypress Bioscience, Inc.										Confidential
Revenue assumptions for Prosorba for RA
(000 except per share amounts)


		Historical		Current	Projections
Fiscal year end December 31st		1996	1997	1998	1999	2000	2001	2002	2003


PROSORBA for RA
Total US RA market (000s) - note 1				2,400	2,436	2,473	2,510	2,547	2,585
Implied growth (yr/yr)					1.5%	1.5%	1.5%	1.5%	1.5%
Refractory patients (000s) - note 2				74	75	76	77	79	80
Severe patients (000s) - note 2				83	84	86	87	88	89
Total US target market of refractory and severe patients				157	159	162	164	167	169

Penetration of PROSORBA for RA
Market share of refractory patients (%)					1.0%	5.0%	10.0%	15.0%	20.0%
Market share of severe patients (%)					0.5%	2.0%	4.0%	8.0%	12.0%

Number of refractory and severe patients (000s)					1.2	5.5	11.2	18.8	26.7

Number of columns ( in 000s, 12 columns/patient)					14.1	66.3	134.5	225.9	320.1
Number of columns for re-treated patients (10%)					1.4	6.6	13.5	22.6	32.0
Total number of columns (000s)					15.5	72.9	148.0	248.5	352.1

PROSORBA Pricing
Column price ($)					800	700	600	550	500
Total PROSORBA for RA revenue in US ($ 000)					$12,380	$51,023	$88,781	$136,696	$176,045

PROSORBA for ITP
Revenue ($ 000s) - Note 3					$2,500	$2,500	$2,500	$2,500	$2,500

Total PROSORBA					$14,880	$53,523	$91,281	$139,196	$178,545




Notes:
1. Source: American College of Rheumatology
2. Company estimates of target market; includes DMARD refractory patients, and those patients believed to have failed at least one DMARD drug, such as methotraxate
3. Flat revenue assumptions: higher volume, but at lower prices.






Cypress Bioscience, Inc.										Confidential
Summary Income Statement
($ 000 except per share amounts)


		Historical		Current	Projections
Fiscal year end December 31st		1996	1997	1998	1999	2000	2001	2002	2003

Revenues
PROSORBA for ITP		$1,968	$3,358	$2,500	$2,500	$2,500	$2,500	$2,500	$2,500
PROSORBA for RA		$0	$0	$0	$12,380	$51,023	$88,781	$136,696	$176,045
Cyplex Platelet Alternative		$0	$0	$0	$0	$0	$0	$0	$3,000
Total Revenues		$1,968	$3,358	$2,500	$14,880	$53,523	$91,281	$139,196	$181,545
Implied growth (yr/yr)			70.6%	-25.6%	495.2%	259.7%	70.5%	52.5%	30.4%
Cost of goods sold		$1,483	$1,773	$1,400	$6,696	$18,733	$22,820	$34,799	$45,386
Gross profit		$485	$1,585	$1,100	$8,184	$34,790	$68,460	$104,397	$136,159

Less SG&A expense		4,344	4,242	5,000	8,928	16,057	22,820	22,271	23,601
Less R&D expense		4,003	6,707	8,000	9,672	13,381	16,431	18,095	18,155
Less other operating expenses		5,824	200	200	446	1,606	2,738	4,176	5,446
Operating income		($13,686)	($9,564)	($12,100)	($10,862)	$3,747	$26,471	$59,854	$88,957
Implied growth (yr/yr)			-30.1%	26.5%	-10.2%	-134.5%	606.5%	126.1%	48.6%
Plus non-operating income (net)		401	401	350	250	250	500	500	500
Less taxes		0	0	0	0	0	0	0	13,419
Net income		($13,285)	($9,163)	($11,750)	($10,612)	$3,997	$26,971	$60,354	$76,039
Implied growth (yr/yr)			-31.0%	28.2%	-9.7%	-137.7%	574.9%	123.8%	26.0%
Weighted average shares outstanding		29,206	35,237	41,500	46,000	49,000	52,000	55,000	60,000
Earnings per share (EPS)		(0.45)	(0.26)	(0.28)	(0.23)	0.08	0.52	1.10	1.27




CYPB Margins:
Gross margin		24.6%	47.2%	44.0%	55.0%	65.0%	75.0%	75.0%	75.0%
SG&A as a % of revenues		220.7%	126.3%	200.0%	60.0%	30.0%	25.0%	16.0%	13.0%
R&D as a % of revenues		203.4%	199.7%	320.0%	65.0%	25.0%	18.0%	13.0%	10.0%
Other operating expenses as a % of revenues		295.9%	6.0%	8.0%	3.0%	3.0%	3.0%	3.0%	3.0%
Operating margin		-695.4%	-284.8%	-484.0%	-73.0%	7.0%	29.0%	43.0%	49.0%
Pre-tax margin		-715.8%	-296.8%	-498.0%	-74.7%	6.5%	28.5%	42.6%	48.7%
Net margin		-675.1%	-272.9%	-470.0%	-71.3%	7.5%	29.5%	43.4%	41.9%
Tax rate		0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	15.0%









Cypress Bioscience, Inc.										Confidential
Valuation Analyses
($ 000s except per share amounts)



			Past	Current	Projections
			1997	1998	1999	2000	2001	2002	2003
	Revenues		3,358	2,500	14,880	53,523	91,281	139,196	181,545
	Operating Income		(9,564)	(12,100)	(10,862)	3,747	26,471	59,854	88,957
	Net Income		(9,163)	(11,750)	(10,612)	3,997	26,971	60,354	76,039
	Earnings Per Share		(0.26)	(0.28)	(0.23)	0.08	0.52	1.10	1.27
	Shares outstanding		35,237	41,500	46,000	49,000	52,000	55,000	60,000





Terminal P/E Multiple Method
			Discount Rate
			30%	32%	34%	36%	38%
		20.00	409,589	379,485	351,998	326,866	303,857
		22.50	460,787	426,921	395,998	367,724	341,839
Terminal P/E multiple:		25.00	511,986	474,357	439,998	408,583	379,821
		27.50	563,184	521,792	483,998	449,441	417,803
		30.00	614,383	569,228	527,997	490,299	455,785
			Average of shaded area=			440,979
			Per share average of shaded area=			$10.63

Terminal Operating Income Multiple Method
			Discount Rate
			30%	32%	34%	36%	38%
		12.00	287,505	266,375	247,081	229,439	213,288
		14.00	335,423	310,771	288,261	267,679	248,836
Terminal operating income multiple:		16.00	383,340	355,166	329,441	305,919	284,385
		18.00	431,258	399,562	370,621	344,159	319,933
		20.00	479,176	443,958	411,801	382,399	355,481
			Average of shaded area=			330,175
			Per share average of shaded area=			$7.96