In Appeal to Cypress Bio Stockholders, Ramius Raises Buyout Offer

[Corrected 9/16/10, 2:00 pm. See below.] San Diego’s Cypress Bioscience (NASDAQ: [[ticker:CYPB]]), which has been stubbornly refusing to negotiate or even meet with a private equity firm over an unsolicited buyout offer, says it will review the fund’s increased offer “consistent with its fiduciary duties.”

Ramius Value and Opportunity Advisors, a subsidiary of the $7.8 billion Ramius fund group in New York, says in a statement today that it is taking its increased offer of $4.25 a share directly to Cypress shareholders, “given the board’s continuing refusal to negotiate with us.”

Cypress, which responded within hours in a statement, says, “stockholders are advised to take no action at this time pending the review of the tender offer by the Cypress Board of Directors.”

The activist investment fund, which holds about 10 percent of Cypress shares, initially offered to buy Cypress at $4 a share in July in an unsolicited bid that was valued at nearly $160 million for all outstanding shares. The sweetened offer would put the overall value of the deal at about $164 million for all outstanding shares (Ramius obviously would not acquire the shares it already owns).

[Corrects terms of milnacipran deal] Cypress spurned the Ramius offer in August, saying it “grossly undervalues Cypress’ current business and future prospects.” In an additional defiant move, Cypress also announced that it was withdrawing from its commercial business and “discontinuing” its rights to co-promote milnacipran (Savella), its drug for fibromyalgia (pain in the muscles, ligaments, and tendons) with Forest Laboratories. Forest is paying Cypress $2 million to “facilitate” the end of Cypress’ role, and Cypress says it is retaining its royalty on sales and other rights. As part of that move, Cypress laid off 123 people, or 86 percent of its workforce.

In a later announcement, Cypress said it had acquired a potential treatment for the core symptoms of autism from Bothell, WA-based Marina Biotech (NASDAQ: [[ticker:MRNA]]) and an electronic nicotine delivery device from Alexza Pharmaceutical (NASDAQ: [[ticker:ALXA]]) of Mountain View, CA, developed to help smokers quit smoking.

Since then, two other institutional investors have joined the brewing proxy battle by issuing open letters that were sharply critical of the biotech’s management and

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.