Cypress Rises 20 Percent on the Possibility of a Sale to Ramius: Biotech's Latest M&A Action

by: The Burrill Report

By Marie Daghlian

After being twice rebuffed, hedge fund firm Ramius revealed that it was still hungry for a deal. In a letter sent December 9 to the board of directors of Cypress Bioscience (CYPB), it outlined its willingness to acquire all of the specialty pharmaceutical's outstanding shares for $5.50 per share.

The sweetened offer represents a 120 percent premium over the $2.50 closing price of Cypress stock on July 16, the last trading day before Ramius publicly proposed to acquire the company for $4 a share in cash.

The new offer has some strings attached, however. The Cypress board must make its decision by end of day Friday, the day of this posting, and enter into a definitive merger agreement by Sunday, December 12.

Ramius already owns 9.9 percent of Cypress and commenced a tender offer on September 15 for the remainder of the company for $4.25 per share. In the meantime, Cypress sold off its diagnostics business to Exagen for $4 million upfront and up to $4 million more in milestone payments plus royalties on product sales.

Until this new bid, shares have been trading around $4 while Cypress mulls its strategic alternatives. Ramius thinks its $5.50 offer will make its board see that the new deal is the best course to provide stockholders with a high degree of certainty that they will receive immediate full and fair value for their shares.

Ramius has lined up financing to enable it to follow through on the $5.50 a share deal if it is accepted. It has also extended its $4.25 tender offer, scheduled to expire December 10, by one week. So far about 7.8 percent of outstanding shares have been tendered.

Shares of Cypress ended in trading Friday, December 10 at $4.93 with no word on what its board will do.

Sanofi-Aventis’ (NYSE:SNY) tender offer for Genzyme (GENZ) was also scheduled to expire December 10. Sanofi has not budged in its $69 per share offer. Genzyme’s board thinks that’s too low. Genzyme CEO Henri Termeer has brought up the possibility of contingent value rights for its blood cancer drug Campath. Genzyme says Campath works as a treatment for multiple sclerosis and is preparing to get approval for that indication by 2013.

Campath brought in less than $150 million in revenue last year, according to Genzyme. If it is approved for multiple sclerosis, it predicts sales of $3 billion by 2017, while Sanofi’s estimate for peak sales from multiple sclerosis are only $700 million, as reported in Bloomberg.

Analysts believe the deadline will be extended by 50 days to give the companies time to come to terms with each other. Sanofi’s board is open to either upping its offer or adding contingent value rights, but unwilling to do both, people familiar with the deliberations told Bloomberg.

Johnson & Johnson (NYSE:JNJ) plans to formally launch a $2.3 billion tender offer for the outstanding shares of Dutch vaccine maker Crucell (NASDAQ:CRXL). Johnson & Johnson already hold about 17.9 percent of Crucell shares.

The deal was originally announced in September after the boards of both companies agreed to the merger. But it has been delayed after Crucell suspended operations at its South Korea facility and halted vaccine shipments from the plant because of sterility issues. J&J is waiting for an update on the contamination issues before launching an unconditional offer.

Finally, in what could be one of the biggest partnering deals of the year, Cephalon (NASDAQ:CEPH) is teaming up with Australian stem cell company Mesoblast to develop and commercialize stem cell therapeutics for degenerative cardiovascular and central nervous system diseases. Cephalon hopes the deal will help it become a leader in regenerative medicine.

Cephalon will pay Mesoblast $130 million upfront, up to $1.7 billion in milestone payments, and take close to a 20 percent stake in the company for another $220 million. In return, Cephalon will get exclusive global rights in three treatment areas to products derived from Mesoblast’s adult Mesenchymal precursor stem cell technology. The alliance also extends to products for augmenting hematopoietic stem cell transplantation in cancer patients.

Mesoblast will be responsible for certain phase 2a trials and Cephalon will assume all further development and commercialization costs. Mesoblast will retain all manufacturing rights and will share significantly in the net product sales [See story].


Global Venture Financings
Company Location Amount Raised (USD M) Principal Focus
SuppreMol Martinsried, Germany 20.6 Therapeutics-autoimmune
TYRX Monmouth Junction, NJ 20.0 Medical devices
Sequenta San Francisco, CA 13.0 Diagnostics
Estech San Ramon. CA 8.5 Medical devices
Ocimum Biosolutions Gaithersburg, MD 8.0 Tools/Technology
BioTheryX Chappaqua, NY 4.5 Therapeutics-cancer
Sofie Biosciences Culver City, CA 2.0 Tools/Technology
Ortho Kinematics Austin. TX 2.0 Diagnostics
Total Raised US 58.0
Total Raised Non-US 20.6
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
Anacor Pharmaceuticals Bill & Melinda Gates Foundation 2.2 Anti-infectives
Bioo Scientific National Science Foundation 0.2 microRNA detection
Amicus Therapeutics Michael J. Fox Foundation 0.5 Parkinson's disease
Navigen Pharmacetuicals DoD, DTRA 21.5 Hemorrhagic fevers
Total Grants and Contracts 24.4
Company Ticker Amount
Raised (USD M)
Financing Type
ThromboGenics (Belgium) Euronext:THR 74.2 PIPE
Bavarian Nordic (Denmark) CSE:BAVA 36.4 PIPE
Microbix Biosystems (Canada) TSX:MBX 0.6 PIPE
ALDA Pharmaceuticals (Canada) TSX-V:APH 0.2 PIPE
Unilife UNIS 22.7 PIPE-Australian depository shares
IGI Laboratories IG 6.5 PIPE
Access Pharmaceuticals OTC:ADDP 6.0 PIPE-RDO
InVivo Therapeutics OTC:NVIV 2.5 PIPE
Geron GERN 100.0 Follow on
Momenta Pharmaceuticals MNTA 57.4 Follow on
Insulet PODD 43.0 Follow on
XenoPort XNPT 28.6 Follow on
EnteroMedics ETRM 25.9 Follow on
Aastrom Biosciences ASTM 22.5 Follow on
Merck MRK 2,000.0 Debt
Life Technologies LIFE 800.0 Debt
Bio-Rad Laboratories BIO 425.0 Debt
HeartWare HTWR 100.0 Debt
Neurologix OTC:NRGX 6.0 Loan
Mesoblast (Australia) ASX:MSB 220.0 Equity stake by Cephalon
Galapagos (Belgium) Euronext:GLPG 0.9 Warrant exercise
NON-US 332.3
Acquirer Target Deal Value
Aetna Medicity 500.0 Healthcare IT
Al-Dorra Group (Kuwait) Spencer Pharmaceutical 245.0 Specialty pharma
Ramius Cypress Bioscience 200.0 IN PLAY
Sun Pharmaceuticals (India) Caraco Pharmaceutical Laboratories 188.0 Generics
GlaxoSmithKline (United Kingdom) Nanjing MeiRui Pharma (China) 70.0 Emerging markets
Olympus (Japan) Stryker's OP-1 unit 60.0 Orthopedics
Opto Circuits (India) Cardiac Science 55.2 Medical devices
Caliper Life Sciences Cambridge Research & Instrumentation 20.0 Tools/Technology
Chongqing Lummy Pharmaceutical (China) Sichuan Hezheng Pharmaceutical (China) 13.5 Traditional Chinese Medicines
EKF Diagnostics (Germany) Argutus Medical unit (United Kingdom) 3.4 Diagnostics
Fx Solutions (France) Small Bone Innovations N/A Orthopedics
Myriad Genetics Melanoma Diagnostics N/A Diagnostics
Company/Licensee Company/Licenser Deal Value
Cephalon Mesoblast (Australia) 2,000.0 Stem Cell Alliance
Immune Pharmaceuticals iCo Therapeutics (Canada) 33.0 Antibody License Option
Galderma (France) NovaBay Pharmaceuticals 15.3 Dermatology License
Astellas Pharma (Japan) Cytori Therapeutics 10.0 Equity and Option Agreement
Sanofi-Aventis (France) Shanghai Institutes for Biological Sciences (China) N/A Cancer Technology License
MacroGenics PolyTherics (United Kingdom) N/A Drug Research Collaboration
Gruenenthal (Germany) Forest Laboratories N/A Pain Drug License
Invida Holdings Sinclair Pharma (United Kingdom) N/A Marketing Partnership
Geron Angiochem (Canada) N/A Cancer License
Centacor (J&J) Apixigen N/A Antibody Discovery License
Kyowa Hakko Kirin (Japan) Dicerna Pharmaceuticals N/A Extension of Collaboration
Bayer Schering Pharma (Germany) Prometheus Laboratories N/A Oncology Service Contract
MonoSolRx Midatech Group (United Kingdom) N/A Daibetes Joint Venture
Agrivida Syngenta Ventures (Switzerland) N/A Agbio Collaboration
Serodus (Norway) Roche (Switzerland) N/A Cardiovascular Drug License
Pfizer Morphosys (Germany) N/A Technology License