RECOMMENDATION: BUY
CYPRESS BIOSCIENCE, INC. (NASDAQ: CYPB)
Market Data:
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AMBI Corporate Information:
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Recent Developments
CYPB issued two announcements today -- one pertaining to an FDA letter of deficiency relating to the review of the Prosorba column for rheumatoid arthritis (RA), and one pertaining to a signed letter of intent (LOI) with Fresenius AG for a global license and distribution agreement on the same product. We have discussed both events with senior management, and while the FDA letter will result in a short-term delay, we continue to believe the column will be approved in the near term and that the Fresenius agreement, upon execution of a definitive agreement, is an extremely positive development for CYPB. We continue to recommend purchase of CYPB common shares, and suggest investors BUY on any weakness attributed to the FDA action.
FDA Request for Information: Last Tuesday, CYPB received a letter of deficiency identifying questions that must be addressed prior to approval. This letter came two days before the end of the 180-day expedited review period, and pertained to questions that arose after a routine compliance audit of clinical trial data. The five questions all related to the Pivotal Phase III trial data, and were answered by CYPB in a response to the FDA late last week. In this letter, the FDA also stated its desired protocol for a post-approval Phase IV study. It is our understanding that CYPB management, in a conference call with the FDA, has agreed to the FDA's desired study design. We believe that the compliance audit questions were routine, and that this request will result in only a short-term delay in the process that will lead to the approval of Prosorba for use in RA.
LOI With Fresenius AG: CYPB announced that it has signed an LOI with Fresenius AG. The LOI contemplates an exclusive license and distribution agreement for the Prosorba column in the US, Europe and Latin America. The LOI suggests a collaborative effort in the US and Europe, with CYPB and Fresenius making joint investments and sharing profits from sales. Additionally, Fresenius will make certain equity investments in CYPB and make cash milestone payments. Fresenius will sell directly into the blood bank market, will set up operations in its extensive network of dialysis centers, will develop new equipment integrating the Prosorba device into the Fresenius apheresis equipment, and will provide for the development of mobile units to provide the Prosorba therapy. Fresenius is a world leader in the production of apheresis equipment, and in the operation of dialysis centers, and we believe the ideal partner for CYPB for this product. CYPB management anticipates the signing of definitive agreements in late March 1999.
We continue to believe CYPB is undervalued at current levels based on Prosorba for RA alone, without regard for the significant potential of its Cyplex technology. We believe that the FDA action will result in only a short-term delay of the approval of Prosorba for RA, and that the contemplated collaborative agreement with Fresenius is very positive. We reiterate our BUY recommendation, and suggest investors BUY on any weakness attributed to the FDA action.
Company Description
Cypress Bioscience, Inc. ("CYPB") develops, manufactures and markets medical devices and therapeutics for certain types of immune diseases and is engaged in the development of a novel blood platelet substitute. CYPB is currently awaiting FDA review of its completed PMA to the FDA for the Prosorba column for Rheumatoid Arthritis (RA). CYPB currently markets the Prosorba column for treatment of idiopathic thrombocytopenic purpura (ITP), an immune disorder where platelets are depleted, reducing the clotting potential of blood. CYPB is also in Phase II clinical trials for Cyplex, a substitute for blood platelets which offers substantially longer shelf life and a greater safety profile than traditional platelet alternatives.
For Additional Information
Contact SmallCaps Online LLC -- 212-554-4158
Website: www.SmallCapsOnline.com
Sources for Additional Information
The following are website addresses offering related information, and links to other sources of information.
| www.CypressBio.com | CYPB's corporate website |
| www.SmallCapsOnline.com | SmallCaps Online's site for company information and research |
| www.FDA.gov | US Food and Drug Administration homepage |
| www.rheumatology.org | American College of Rheumatology homepage |
| www.arthritis.org | Arthritis Foundation homepage |
| www.WHO.int | World Health Organization homepage |
| www.AABB.org | American Association of Blood Banks homepage |
| www.AMA-Assn.org | American Medical Association homepage |
| www.SEC.gov | U.S. Securities and Exchange Commission, with links to EDGAR filings |
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