<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 8, 1999
CYPRESS BIOSCIENCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-12943 22-2389839
(Commission File No.) (IRS Employer Identification No.)
4350 EXECUTIVE DRIVE, SUITE 325
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 452-2323
-------------------------------------------
<PAGE>
Item 5. Other Events.
------------
PARTNERSHIP WITH FRESENIUS AG
On March 8, 1999, Cypress Bioscience, Inc. (the "Company") announced that
it signed a definitive agreement covering its partnership with Fresenius AG of
Bad Homburg, Germany and its United States subsidiary, Fresenius Hemotechnology
Inc. of Concord, California.
The partnership, which is contingent upon certain closing conditions,
provides Fresenius with an exclusive license to distribute the Prosorba(R)
column, in the United States, Europe and Latin America and, subject to certain
conditions, Japan and certain other countries and calls for joint efforts by the
Company and Fresenius AG to commercialize the Prosorba column and provides
Fresenius with a two-year option to purchase the leasehold title and all related
assets to the Company's manufacturing facility in Redmond, Washington.
Financial terms include an upfront equity investment by Fresenius, license
payments of up to $54 million based upon sales, and a line of credit extended to
the Company to support the product launch and manufacturing scale-up. The
Company hereby incorporates by reference the contents of the new release
announcing its partnership with Fresenius AG.
PROSORBA COLUMN APPROVED BY FDA FOR USE IN RHEUMATOID ARTHRITIS
On March 16, 1999, the Company announced that the U.S. Food and Drug
Administration (the "FDA") has approved the Prosorba column for the use in the
treatment of moderate to severe rheumatoid arthritis. The Company hereby
incorporates by reference the contents of the news release announcing FDA
approval.
WARRANT REDEMPTION
On March 17, 1999, the Company announced that it had called for redemption
approximately 2.7 million outstanding publicly traded warrants. Warrants that
are not exercised by April 12, 1999 will be redeemed by the Company at 10 cents
per warrant on April 19, 1999. The Company hereby incorporates by reference the
contents of the news release announcing the warrant redemption.
Item 7. Exhibits.
--------
99.1 Press Release dated March 8, 1999 announcing the Company's
Partnership with Fresenius AG.
99.2 Press Release dated March 16, 1999 announcing the FDA's
Approval of the Prosorba Column for use in Rheumatoid
Arthritis.
99.3 Press Release dated March 17, 1999 announcing the Company's
Redemption of Publicly Traded Warrants.
1
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CYPRESS BIOSCIENCE, INC.
Dated: March 22, 1999 By: /s/ JAY D. KRANZLER
------------------------------------
Jay D. Kranzler
Chief Executive Officer, Chief
Financial Officer and Chairman of the
Board
2
<PAGE>
INDEX TO EXHIBITS
-----------------
99.1 Press Release dated March 8, 1999 announcing the Company's
Partnership with Fresenius AG.
99.2 Press Release dated March 16, 1999 announcing the FDA's Approval
of the Prosorba Column for use in Rheumatoid Arthritis.
99.3 Press Release dated March 17, 1999 announcing the Company's
Redemption of Publicly Traded Warrants.
3
<PAGE>
EXHIBIT 99.1
Monday March 8, 8:46 am Eastern Time
Company Press Release
Cypress Bioscience Announces Partnership With
Fresenius AG
Definitive Licensing and Distribution Agreement for the Prosorba
Column Includes Equity Investment and Profit Sharing
SAN DIEGO--(BW HealthWire)--March 8, 1999--Cypress Bioscience Inc. (Nasdaq:CYPB
- - news) announced today that it has signed definitive agreements covering its
partnership with Fresenius AG of Bad Homburg, Germany and its United States
(U.S.) subsidiary Fresenius Hemotechnology Inc. (FHI) of Concord, Calif.
The agreement provides Fresenius with an exclusive license to distribute the
Prosorba(R) column, a treatment for rheumatoidarthritis (RA), in the U.S.,
Europe and Latin America and, subject to certain conditions, Japan and select
Asian countries. The partnership is intended to accelerate commercialization of
the Prosorba column into the rheumatology market, and to broaden the
availability of Prosorba column treatments. Financial terms include an upfront
equity investment by Fresenius, license payments of up to $54 million based on
sales, and a line of credit extended to Cypress to support the product launch
and manufacturing scale-up.
The Prosorba column is currently being reviewed by the US Food and Drug
Administration (FDA) as a treatment for moderate to severe RA. In October 1998,
an FDA Advisory Panel recommended approval by a vote of 10 to 1 for this
expanded indication. The column received FDA approval in 1987 for treatment of
Idiopathic Thrombocytopenic Purpura (ITP), an immune-mediated bleeding disorder,
and has been sold for this indication for over 11 years.
"As one of the world's leading health care companies, Fresenius AG is uniquely
positioned to help Cypress successfully launch the Prosorba column into the RA
market. Fresenius' rare combination of expertise on both the product and the
service side of apheresis should facilitate better access to Prosorba column
therapy, and improve cost effectiveness," said Jay D. Kranzler, M.D., Ph.D.,
chairman and chief executive officer of Cypress.
The Prosorba column is used in conjunction with an apheresis procedure, wherein
blood is drawn from a vein in the patient's arm and passed through an apheresis
machine that separates the blood cells from the plasma, the liquid portion of
the blood. The plasma then passes through the Prosorba column, which removes
antibodies, products of the immune system. Thereafter, the plasma is returned,
along with the cells, to the patient through a vein in the other arm.
The partnership, which is contingent upon FDA approval of the Prosorba column
for RA and certain
<PAGE>
other conditions, calls for joint efforts by Cypress Bioscience and Fresenius AG
to commercialize the product. Cypress will take the lead role in ongoing
research, clinical, and regulatory activities in the U.S., while also assuming
responsibility for the sales and marketing efforts directed at rheumatologists.
Fresenius will serve as exclusive distributor for the product in the territory,
participating in co-marketing activities in the US, and leading international
development and registration efforts. In addition, Fresenius will design
"Prosorba-friendly" instruments and disposables and work to make the treatment
more readily available at apheresis centers and other suitable locations,
including dialysis clinics operated by Fresenius Medical Care AG (FMC), a
majority-owned Fresenius company.
Joint Commercialization
In the U.S. market, Cypress and FHI, will work together to support the launch of
the Prosorba column into the RA market. Cypress has significantly expanded the
size of its sales force who will detail the 3900 practicing rheumatologists in
the U.S.
Pending FDA approval and labeling, the product will be positioned as a non-drug
alternative for patients who remain in need of therapeutic options, despite
having been treated with multiple therapies. Based on the current therapeutic
apheresis treatment practices in the U.S., Prosorba column candidates will most
likely be treated in hospital or community blood banks or apheresis centers.
FHI, a leading provider of apheresis equipment and disposables, will handle the
sales, marketing, distribution and technical support associated with Prosorba
column treatment at these sites.
"We are looking forward to offering our customers this novel product, and to
broaden the potential clinical applications of therapeutic apheresis,"
commented Dale Richardson, president and chief operating officer of FHI.
Additional Contributions by Fresenius
Fresenius AG has additionally committed to leverage its international presence,
expertise in instrument design, and its position of leadership in the dialysis
market to facilitate Prosorba column therapy. The company will lead the efforts
in clinical development, product registration and marketing in all of the
international territories, and intends to begin the European registration
process shortly.
Fresenius will also adapt a therapeutic apheresis instrument already under
development to simplify the process of Prosorba column therapy. Anticipated
launch for the instrument is 1999 in Europe and 2000 in the U.S. Prosorba column
related disposables will also be developed, both for the existing Fresenius
apheresis instrument, the AS104 Cell Separator, as well as for the new
therapeutic apheresis machine referred to above.
Additionally, Fresenius AG will work with FMC to increase the availability of
Prosorba column treatment. FMC is a leading provider of dialysis services in the
world, with 770 dialysis sites in the US alone. Currently, FMC has contracts
with more than 500 hospitals to offer acute services, including apheresis
treatments. FMC has agreed to expand its service capabilities to include the
Prosorba column once the product receives FDA approval for RA.
"The Cypress partnership is a strategic one for Fresenius, in that it offers an
opportunity to realize benefits and synergies across multiple divisions and
businesses in which we participate. We are confident that our engineering,
product development, international expertise and our customer base will be a
successful combination with Cypress' rheumatology focus," said Rainer Baule,
president and COO, Corporate Sector Intensive Care & Hemotechnology, Fresenius
AG.
Terms of the Transaction
The terms of the agreement with Fresenius specify joint efforts to introduce and
market the Prosorba column in the US, with Fresenius having exclusive
distribution rights and responsibility for clinical trials and registration
overseas. The agreement includes a 50/50 profit split in countries other than
the US. The profit sharing is 50/50 in the U.S. until Prosorba column revenue
reaches a pre-determined sales
<PAGE>
threshold, after which time Cypress will receive 60% of the profits and
Fresenius will receive 40%. Other considerations to Cypress include an upfront
equity investment by Fresenius of $1.5 million, as well as additional license
payments of up to $54 million based on sales.
Fresenius AG will also work with Cypress to apply its expertise in manufacturing
scale-up to the Prosorba column. Cypress has granted Fresenius the option to
purchase the Prosorba column manufacturing facility and inventory, located in
Redmond, Wa., until the end of 2000. Associated with this purchase option,
Fresenius has extended a line of credit to Cypress. If the purchase option were
exercised, the sale price of the assets would be offset by the line of credit.
This line of credit is intended to provide Cypress with the working capital
required to fund its share of the market launch, and to begin the scale-up
process. It is anticipated that approximately $7 million will be available to
Cypress in 1999 under this line of credit.
About Cypress Bioscience Inc.
Cypress Bioscience Inc. develops, manufactures and markets medical devices and
therapeutics for the treatment of certain types of immune disorders and is
engaged in the development of novel therapeutic agents for the treatment of
blood platelet disorders. In addition to Cypress' lead product, the Prosorba
column, the company is developing Cyplex(TM) (Infusible Platelet Membranes),
which is positioned to become an alternative to traditional platelet infusions.
About Fresenius AG
Fresenius AG is a leading health care company with products and services for
dialysis, the hospital and the outpatient medical care of patients. In the first
nine months of 1998 Fresenius generated sales of DM 6.365 billion (U.S. $3.54
billion) and a net income of DM 202 million (U.S. $112.5 million). On Sept. 30,
1998, the Fresenius Group had approximately 36,500 employees.
About Fresenius Hemotechnology Inc.
Fresenius Hemotechnology Inc. is a U.S. subsidiary of Fresenius AG that focuses
on cell separators, autotransfusion devices, blood filters and products for
blood banks and hospitals including progenitor cell enrichment devices.
Except for historical information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties, including, but
not limited to, the risk that the company will not receive FDA approval of the
Prosorba column for RA; the risk of delay in the formal product launch of the
Prosorba column and the related Fresenius instruments; the risk that the
Fresenius collaboration will not be finalized; the risk that the Prosorba column
will not be successfully marketed for use as a treatment for RA; the risk that
less than $7MM will be available to the company under the Fresenius line of
credit; as well as other risks detailed from time to time in the company's SEC
reports, including its report on Form 10-K for the year ended Dec. 31, 1997.
- ---------------------
Contact:
Cypress Bioscience Inc.
Jay D. Kranzler, 619/452-2323 (CEO)
Carl Bobkoski, 619/452-2323 (President & COO)
Manda Hall, 619/452-2323 (IR Administrator)
or
Robinson Lerer & Montgomery
James Ankner, 212/484-7697 (Investor Relations)
Lena Kim, 212/484-6706 (Media Relations)
<PAGE>
EXHIBIT 99.2
Tuesday March 16, 8:23 pm Eastern Time
Company Press Release
Prosorba Column Approved by FDA for Use in
Rheumatoid Arthritis
Breakthrough Treatment -- First Available Non-Drug
Alternative -- Launch set for April
SAN DIEGO--(BW HealthWire)--March 16, 1999-- Conference call 3/17/99 at 4:15
p.m. EST
Cypress Bioscience Inc. (Nasdaq:CYPB - news) announced today that the U.S. Food
and Drug Administration (FDA) has approved the Prosorba(R) column for use in the
treatment of moderate to severe rheumatoid arthritis (RA).
"Drugs are no longer the only option for rheumatoid arthritis patients with
active disease. Now physicians and patients have the Prosorba(R) column, a
therapeutic device, as a new option for treating rheumatoid arthritis," said
Jay D. Kranzler, M.D., Ph.D., chief executive officer and chairman of the board
of Cypress Bioscience Inc. "The FDA's approval of this device is a tremendous
milestone for patients still suffering with painful and swollen joints."
"It has restored my life," said Merrill Meyer, from Phoenix, Ariz., whose
rheumatoid arthritis was so painful that she could not even brush her hair
before participating in the trial. "Prosorba(R) has given my body the ability
to fight the disease with minimal medication."
The Prosorba(R) column is indicated for use in the therapeutic reduction of the
signs and symptoms of moderate to severe RA in adult patients with long standing
disease who have failed or are intolerant of disease-modifying anti-rheumatic
drugs (DMARDs). An estimated 10% of the 2.5 million RA patients in the United
States do not respond to DMARD therapy and may benefit from Prosorba(R) column
treatment.
The company intends to conduct a Phase IV program assessment of the Prosorba(R)
column in combination with methotrexate.
"The Prosorba(R) column is a significant addition to our therapeutic options.
It will be particularly useful in treating patients who are resistant to other
therapies," said rheumatologist Dr. Daniel Furst, medical director of the
Virginia Mason Medical Center in Seattle, and lead investigator in the
Prosorba(R) column Phase III clinical trial. "In the clinical trial, the
Prosorba(R) column worked in about half of the patients who completed treatment
- -- a good response rate for these patients -- most of whom have failed many of
the second-line medicines we use for RA."
"The launch of the Prosorba(R) column for use in moderate to severe RA will take
place in April.
<PAGE>
Cypress' newly hired sales representatives are currently finalizing their
product training prior to the official launch, after which they will distribute
product information to the targeted rheumatology audience of approximately 3,500
physicians. Cypress will be initiating an extensive education program to help
health care providers and rheumatoid arthritis patients across the country
understand the benefits of this new approach to managing rheumatoid arthritis,"
said Carl Bobkoski, president and chief operating officer of Cypress Bioscience.
"Since the Prosorba(R) column has been used in the treatment of Idiopathic
Thrombocytopenic Purpura (ITP) for the past 12 years, there is already a
nationwide base of trained facilities able to administer the treatment. As was
announced earlier this month, we have entered into a definitive agreement with
Fresenius AG of Bad Homburg, Germany and its subsidiary Fresenius Hemotechnology
Inc. of Concord, Calif., under which Fresenius will service and train
therapeutic apheresis centers throughout the U.S. All these facilities will be
available to provide apheresis services to rheumatologists and patients
interested in Prosorba(R) column treatment."
About the Partnership with Fresenius
The agreement provides Fresenius with an exclusive license to distribute the
Prosorba(R) column, a treatment for rheumatoid arthritis (RA), in the U.S.,
Europe and Latin America and, subject to certain conditions, Japan and select
Asian countries. Financial terms include an upfront equity investment by
Fresenius, license payments of up to $54 million based on sales, and a line of
credit extended to Cypress to support the product launch and manufacturing
scale-up.
The partnership calls for joint efforts by Cypress and Fresenius AG to
commercialize the product. Cypress will take the lead role in ongoing research,
clinical, and regulatory activities in the U.S., while also assuming
responsibility for the sales and marketing efforts directed at rheumatologists.
Fresenius will serve as exclusive distributor for the product in the territory,
participating in co-marketing activities in the U.S., and leading international
development and registration efforts. In addition, Fresenius will design
"Prosorba(R)-friendly" instruments and disposables and work to make the
treatment more readily available at apheresis centers and other suitable
locations, including dialysis clinics operated by Fresenius Medical Care AG
(FMC), a majority-owned Fresenius company.
Cypress Holds Conference Call
Cypress will hold a conference call March 17, 1999 at 4:15 p.m. EST to discuss
FDA approval, its marketing plan for the Prosorba(R) column, the recent
partnership with Fresenius AG and Cypress' 1998 financial results. Please call
800/937-4596 if you wish to participate. Phone lines will open at 4:05 p.m.,
EST.
The call will include a brief report on the topics mentioned above followed by a
question-and-answer period. Participants will include:
Jay Kranzler, chief executive officer;
Carl Bobkoski, president and chief operating officer; and
R. Michael Gendreau, executive vice president, chief medical
officer, and chief scientific officer.
A taped replay will be available following completion of the conference call.
The replay will be available for 48 hours beginning at 6:15 p.m. EST on
Wednesday, March 17 and ending at 6:15 p.m. EST on Friday, March 19. To access
playback of the call, telephone 800/633-8284 and enter the eight-digit
reservation number 11989229. International callers may dial 619/812-6440,
reservation number 11989229.
About Rheumatoid Arthritis and the Prosorba(R) Column
Rheumatoid arthritis is a chronic and often debilitating autoimmune disease in
which the body's immune system attacks its own tissue, often leading to painful
inflammation and deformity of the joints. The disease affects more than 2.5
million Americans, 70% of them women, most between the ages of 25 and 60. An
estimated 10% of the 2.5 million RA patients in the United States do not respond
to DMARD
<PAGE>
therapy and may benefit from Prosorba(R) column treatment.
Cypress's Prosorba(R) column is a polycarbonate (plastic) cylinder that contains
highly purified protein A immobilized on an inert silica matrix. The protein A
binds to and removes antibodies, including clusters of Circulating Immune
Complexes (CICs) and antigens, that contribute to the symptoms characteristic of
RA.
Additional effects of the Prosorba(R) column continue to be actively
investigated by the company. The Prosorba(R) column, a therapeutic medical
device, will join new pharmaceutical products for rheumatoid arthritis such as
Immunex's (Nasdaq:IMNX - news) TNF inhibitor, ENBREL(TM) (etanercept), Hoechst
Marion Roussel's (NYSE:HOE- news) Arava(TM) (leflunomide) and Monsanto Co.'s
(NYSE:MTC - news) Celebrex (celecoxib).
The standard course of treatment involves 12 weekly outpatient apheresis
sessions. Each session takes approximately two hours. In a process similar to
kidney dialysis, a patient's blood is removed from an arm and passed through a
machine that separates the blood cells from the plasma. The plasma is then
passed through the Prosorba(R) column, recombined with the blood cells and
finally returned to the patient through the other arm.
Phase III Clinical Trial
A pivotal Phase III trial demonstrating the Prosorba(R) column's efficacy ended
in January 1998 - more than a year ahead of schedule after an independent Data
Safety and Monitoring Board recommended an early cessation due to favorable
safety and statistically significant efficacy results.
In the double-blinded, sham-apheresis controlled clinical trial, nearly half of
the patients who completed all 12 treatments showed significant clinical
improvement by stringent American College of Rheumatology (ACR) criteria. The
response was often durable, lasting up to 75 weeks in some patients. The
patients had a statistically significant reduction in swollen and tender joint
counts, as well as other improvements, and their response was maintained in the
absence of any other therapy during and after treatment.
Twelve leading arthritis centers -- including the Virginia Mason Medical Center
in Seattle, the University of Utah in Salt Lake City, University Hospitals of
Cleveland and the University of Pennsylvania -served as sites for the Phase III
clinical trial. The study enrolled 109 patients who were considered the most
severely affected of the RA population, having suffered from the disease for an
average of 15.5 years (1.7 years minimum to 50.6 years maximum disease duration
for the Prosorba(R) column patients) and having failed an average of 5 different
DMARD regimens.
About Cypress Bioscience Inc.
Cypress Bioscience Inc. develops, manufactures and markets medical devices and
therapeutics for the treatment of certain types of immune disorders and is
engaged in the development of novel therapeutic agents for the treatment of
blood platelet disorders. The Prosorba(R) column, a therapeutic medical device,
was approved by the FDA in 1987 for use in Idiopathic Thrombocytopenic Purpura
(ITP), an immune bleeding disorder.
In addition to Cypress's lead product, the Prosorba(R) column, the company
acquired Cyplex(TM) (Infusible Platelet Membranes), which is positioned to
become an alternative for traditional platelet infusions.
About Fresenius AG
Fresenius AG is a leading health care company with products and services for
dialysis, the hospital and the outpatient medical care of patients. In the first
nine months of 1998 Fresenius generated sales of DM 6.365 billion (US $3.54
billion) and a net income of DM 202 million (US $112.5 million). On Sept. 30,
1998, the Fresenius Group had approximately 36,500 employees.
<PAGE>
About Fresenius Hemotechnology Inc.
Fresenius Hemotechnology Inc. is a U.S. subsidiary of Fresenius AG that focuses
on cell separators, autotransfusion devices, blood filters and products for
blood banks and hospitals including progenitor cell enrichment devices.
Except for historical information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties, including, but
not limited to, the company's and its Partner's ability to market successfully
the Prosorba(R) column for use as a treatment for RA; whether the company will
be successful in collaborating with a marketing partner or not; the company's
ability to receive regulatory approval for Cyplex(TM) on a timely basis, if at
all; and whether Cyplex will become a substitute for traditional platelet
infusions, as well as other risks detailed from time to time in the company's
SEC reports, including its report on the most recent Form 10-K.
- ----------------------
Contact:
Cypress Bioscience Inc.
Jay D. Kranzler, Carl Bobkoski and
Manda Hall, 619/452-2323
or
Investor/Media Contacts
Robinson Lerer & Montgomery
James Ankner, 212/484-7697
or Lena Kim, 212/484-6706
<PAGE>
EXHIBIT 99.3
Wednesday March 17, 7:00 am Eastern Time
Company Press Release
Cypress Bioscience Announces Fourth
Quarter and Fiscal 1998 Results
SAN DIEGO--(BUSINESS WIRE)--March 17, 1999--Cypress Bioscience Inc. (Nasdaq:CYPB
- - news) today announced its financial results for the quarter and year ended
Dec. 31, 1998.
The company reported a quarterly net loss applicable to common stockholders of
approximately $2.2 million or $0.05 per share (basic and diluted) in 1998,
versus a net loss of approximately $1.5 million or $0.04 per share (basic and
diluted) for the comparable period in 1997. For the year ended Dec. 31, 1998,
the company had a net loss applicable to common stockholders of approximately
$11.2 million or $0.29 per share (basic and diluted), versus a net loss of
approximately $8.9 million or $0.25 per share (basic and diluted) for the same
period in 1997.
In September 1998, the company recorded a one-time, non cash "imputed
dividend" of approximately $2.1 million from the issuance of Series A
Convertible Preferred Stock, which raised approximately $4.6 million. Excluding
the effect of the imputed dividend, the net loss would have been approximately
$9.1 million or $0.23 per share (basic and diluted) for the year ended Dec. 31,
1998.
Preparing for Launch of Prosorba Column in Rheumatoid Arthritis (RA)
Yesterday, the company also announced that the Prosorba column had been granted
approval by the U.S. Food and Drug Administration (FDA) for treatment of
moderate to severe RA. Earlier this month, the company announced that it has
signed definitive agreements covering its partnership with Fresenius AG of Bad
Homburg, Germany and its United States (U.S.) subsidiary Fresenius
Hemotechnology Inc. (FHI) of Concord, Calif.
The agreement provides Fresenius with an exclusive license to distribute the
Prosorba column, a treatment for rheumatoid arthritis (RA), in the U.S., Europe
and Latin America and, subject to certain conditions, Japan and select Asian
countries. Other considerations to Cypress include an upfront equity investment
by Fresenius of $1.5 million, as well as additional license payments of up to
$54 million based on sales.
In addition, Cypress has granted Fresenius the option to purchase the Prosorba
column manufacturing facility and inventory, located in Redmond, WA, until the
end of 2000. Associated with this purchase option, Fresenius has extended a line
of credit to Cypress. This line of credit is intended to provide Cypress with
the working capital required to fund its share of the market launch, and to
begin the scale-up process. It is anticipated that approximately $7 million will
be available to Cypress in 1999 under this line of credit.
<PAGE>
The partnership with Fresenius calls for joint efforts by Cypress and Fresenius
to commercialize the product. Fresenius will serve as the exclusive distributor
for the product in the territory, participating in co-marketing activities in
the U.S., and leading international development and registration efforts. The
profit sharing is 50/50 in countries other than the U.S., and 50/50 in the U.S.
until Prosorba column revenue reaches a pre-determined sales threshold.
"This past year has been the most significant one in Cypress' history, having
made the clinical and commercial progress resulting in FDA approval for RA, and
the partnership with Fresenius in the first quarter of 1999," commented Jay D.
Kranzler M.D. Ph.D., chairman of the board and chief executive officer of
Cypress. "This year, we stand to benefit from those efforts with the launch of
the Prosorba column for the RA indication. We believe that the Prosorba column
will be an important product for those RA patients who are not adequately
treated with current therapies, and that the RA indication will be a significant
driver of sales growth for the product."
Further Discussion of 1998 Results
Product sales for the quarter and year ended Dec. 31, 1998 totaled approximately
$782,000 and $2.4 million, respectively, compared to product sales of
approximately $763,000 and $3.0 million for the same periods in 1997. The
decline in product sales in 1998 as compared to 1997 can be attributed in part
to the reallocation of sales personnel from Idiopathic Thrombocytopenia Purpura
("ITP") sales to preparations for approval and launch in RA. Revenue for 1998
included approximately $308,000 in grant income associated with a Phase II NIH
SBIR research grant obtained in conjunction with the company's acquisition of
PRP Inc. in November 1996.
Total operating expenses for the quarter and year ended Dec. 31 were
approximately $3.1 million and $12.1 million in 1998, respectively, compared to
approximately $2.5 million and $12.6 million for the same periods in 1997. The
company expects to continue operating at a loss through 1999, as it ramps up its
sales and marketing expenses to support the Prosorba column RA launch. In the
U.S., Cypress will lead the sales and marketing efforts directed at
rheumatologists, and has added 14 additional salespeople to call on the 3,500
existing rheumatologists throughout the U.S.
The company's cash, cash equivalents, and short-term investments balance at Dec.
31, 1998 was $5.6 million, compared to $8.5 million at Dec. 31, 1997. The
decrease was caused by funds used for operations, partially offset by the
company's private placement of approximately 3,064,000 shares of its Series A
Preferred Stock completed in September 1998, which resulted in net proceeds to
the company of approximately $4.6 million.
Company Calls for Redemption of Publicly Traded Warrants
The company also called for redemption of 2.7 million outstanding publicly
traded warrants. The warrants are traded on the Nasdaq SmallCap Market under the
symbol "CYPBZ". Each warrant entitles the holder to purchase one share of
Cypress Common Stock at an exercise price of $2.00.
Warrants that are not exercised by April 12, 1999 will be redeemed by the
company at 10 cents per warrant on April 19, 1999. Warrant holders have until
5:00 p.m. (New York time) on April 12, 1999 to exercise their warrants.
"The combination of the Fresenius investment, the manufacturing related line of
credit, the expense sharing, and the anticipated $5.4 million in proceeds from
redemption of the warrants, should provide the company with sufficient resources
to achieve positive cash flow from the Prosorba column," said Carl Bobkoski,
president and chief operating officer of Cypress. "By eliminating the need for
significant additional financing, we hope to minimize further dilution, and
maximize return for our shareholders."
Cypress Holds Conference Call Today
Cypress will hold a conference call today, March 17, 1999 at 4:15 p.m. EST to
discuss FDA approval, its marketing plan for the Prosorba(R) column, the recent
partnership with Fresenius AG and Cypress'
<PAGE>
1998 financial results. Please call 800/937-4596 if you wish to participate.
Phone lines will open at 4:05 p.m., EST.
The call will include a brief report on the topics mentioned above followed by a
question-and-answer period. Participants will include:
Jay Kranzler, chief executive officer;
Carl Bobkoski, president and chief operating officer; and
R. Michael Gendreau, executive vice president, chief medical
officer, and chief scientific officer.
A taped replay will be available following completion of the conference call.
The replay will be available for 48 hours beginning at 6:15 p.m. EST on
Wednesday, March 17 and ending at 6:15 p.m. EST on Friday, March 19. To access
playback of the call, telephone 800/633-8284 and enter the eight-digit
reservation number 11989229. International callers may dial 619/812-6440,
reservation number 11989229.
About Cypress Bioscience Inc.
Cypress Bioscience Inc. develops, manufactures and markets medical devices and
therapeutics for the treatment of certain types of immune disorders and is
engaged in the development of novel therapeutic agents for the treatment of
blood platelet disorders. The Prosorba(R) column, a therapeutic medical device,
was approved by the FDA in 1987 for use in ITP, an immune bleeding disorder. In
addition to Cypress's lead product, the Prosorba(R) column, the company acquired
Cyplex(TM) (Infusible Platelet Membranes), which is positioned to become an
alternative for traditional platelet infusions.
About Fresenius AG
Fresenius AG is a leading health care company with products and services for
dialysis, the hospital and the outpatient medical care of patients. In the first
nine months of 1998 Fresenius generated sales of DM 6.365 billion (US $3.54
billion) and a net income of DM 202 million (US $112.5 million). On Sept. 30,
1998, the Fresenius Group had approximately 36,500 employees.
About Fresenius Hemotechnology Inc.
Fresenius Hemotechnology Inc. is a U.S. subsidiary of Fresenius AG that focuses
on cell separators, autotransfusion devices, blood filters and products for
blood banks and hospitals including progenitor cell enrichment devices.
Except for historical information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties, including, but
not limited to, the company's and its Partner's ability to market successfully
the Prosorba(R) column for use as a treatment for RA; whether the company will
be successful in collaborating with a marketing partner or not; the company's
ability to receive regulatory approval for Cyplex(TM) on a timely basis, if at
all; and whether Cyplex will become a substitute for traditional platelet
infusions, as well as other risks detailed from time to time in the company's
SEC reports, including its report on the most recent Form 10-K.
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<PAGE>
CYPRESS BIOSCIENCE INC.
Condensed Financial Data
(In thousands, except share and per share data)
Statements of Operations
<TABLE>
<CAPTION>
Quarters ended Years ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue $ 848 $ 909 $ 2,683 $ 3,296
Expenses (3,105) (2,513) (12,128) (12,576)
Interest income, net 80 122 300 394
Net loss (2,178) (1,482) (9,145) (8,886)
Undeclared, imputed
dividend on preferred
stock -- -- (2,078) --
Net loss applicable
to common stockholders $(2,178) $(1,482) $(11,223) $ (8,886)
Net loss per share
applicable to common
stockholders - basic
and diluted $ (0.05) $ (0.04) $ (0.29) $ (0.25)
Weighted average
number of shares
outstanding - basic
and diluted 40,060 37,148 39,235 35,237
</TABLE>
Balance Sheets
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
1998 1997
<S> <C> <C>
Assets
Cash, cash equivalents and
short-term investments $5,620 $ 8,516
Other current assets 1,854 1,256
Non-current assets 1,842 2,017
Total assets $9,316 $11,789
Liabilities and Stockholders' Equity
Current liabilities $1,905 $ 1,855
Long-term liabilities 566 408
Stockholders' equity 6,845 9,526
Total liabilities and
stockholders' equity $9,316 $11,789
</TABLE>
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Contact:
Cypress Bioscience Inc.
Jay D. Kranzler, Carl Bobkoski, and
Manda Hall, 619/452-2323
or
Robinson Lerer & Montgomery
James Ankner, 212/484-7697
or Lena Kim, 212/484-6706
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