Cypress Bioscience, Inc. and Proprius Pharmaceuticals, Inc., a privately held, San Diego-based specialty pharmaceutical company, jointly announced that Cypress will acquire Proprius in a transaction that includes an upfront payment of $37.5 million in cash as well as an additional $37.5 million in potential milestone-related payments associated with the development of Proprius' therapeutic candidates.
The acquisition brings together Cypress' drug development expertise, commercial resources and lead pharmaceutical candidate, milnacipran, which is currently under US Food and Drug Administration review for the treatment of fibromyalgia, and Proprius' unique portfolio of proprietary, high-value personalised medicine laboratory services and therapeutic product candidates.
Proprius' portfolio includes a number of diagnostic, prognostic and predictive technologies designed to provide clinically meaningful, actionable information to enhance physicians' care of patients with rheumatoid arthritis (RA). The nearest-term commercial opportunities include an early RA prediction technology, which helps to determine the likelihood of developing RA in patients with Undifferentiated Arthritis, and a methotrexate (MTX) polyglutamates monitoring assay, which helps physicians to optimize MTX therapy by providing insights on an individual's metabolism of MTX, which can vary greatly from patient to patient. The information afforded by these technologies is of particular importance in managing RA, a disease where early, aggressive treatment can minimize joint damage and disability, reducing the high clinical and economic costs associated with disease progression. Proprius' early clinical-stage therapeutic candidates include a product to treat pain and a product to treat RA.
The proprietary portfolio of personalized medicine laboratory services will be marketed through a sales force that Cypress will build around the anticipated commercial launch of milnacipran. The sales force will focus on rheumatologists and other pain specialists. Forest Laboratories is responsible for reimbursing Cypress for the cost of the milnacipran detailing effort to these physicians.
"We believe that this combination will allow us to bring a unique offering of therapeutics and personalized medicine laboratory services to physicians, one that addresses important unmet medical needs in the treatment of both fibromyalgia and rheumatoid arthritis," said Jay D. Kranzler, chairman and CEO, Cypress Bioscience. "What's more, we believe that it affords us a unique strategic opportunity, one that will leverage our future sales force while enhancing its access to these specialists. Cypress is positioned to become a robust clinical and commercial organization with a distinct, meaningful and complementary product portfolio."
"In other fields, like gastroenterology, offering diagnostic services in combination with therapeutic products is a proven means of establishing consultative partnerships with specialists and dramatically increases time with, and value to, physicians," said Michael Walsh, founder, president and CEO, Proprius Pharmaceuticals. "Our portfolio of proprietary, high-value clinical laboratory services is unique in rheumatology and, we believe, will become an important component of how rheumatologists manage their patients with rheumatoid arthritis. We are helping the field to take a step closer to the promise of personalized medicine."
Following the close of the transaction, which is expected in March 2008, employees and operations of Proprius Pharmaceuticals will be integrated into Cypress Bioscience in San Diego, California, including Proprius' founder, president and CEO Michael Walsh, who will assume the role of executive VP and chief commercial officer upon closing of the transaction. Walsh was also the co-founder and former president, CEO, and executive chairman of Prometheus Laboratories, Inc.
Financial information surrounding the acquisition will be disclosed in the Company's first quarter Form 10-Q, which is scheduled to be filed on or around May 12, 2008. Per the Company's un-audited financials, Cypress ended 2007 with approximately $182 million in cash - the upfront payment of $37.5 million was deducted from that amount. Oppenheimer & Co. acted as exclusive financial advisor to Cypress in conjunction with this transaction. Jefferies & Company, Inc. acted as exclusive financial advisor to Proprius.