Cypress Bioscience Inc. (CYPB) recently entered into an in-licensing agreement with Israel-based BioLineRx for the development and commercialization of a novel antipsychotic agent to treat schizophrenia.
Cypress Bioscience acquired the exclusive North American license for CYP-1020 for an upfront payment of $30 million. In addition to this, Cypress Bioscience will make milestone payments of up to $160 million on the achievement of clinical and regulatory milestones.
Cypress Bioscience is also liable to pay an additional $85 million on the achievement of commercial milestones and $90 million on approval for additional indications in the US or other North American countries. Cypress Bioscience is also responsible for financing development activities related to the candidate and will pay a royalty to BioLineRx on product sales.
CYP-1020 is being developed for the reduction of psychosis and improvement of cognition in patients suffering from schizophrenia. Results from a recently-conducted proof of concept study on CYP-1020 showed that the candidate not only reduced psychosis compared with placebo, it also improved cognition compared with both placebo and the control arm. Improved efficacy and a differentiated mechanism of action would help the candidate gain share once launched.
Schizophrenia is a severe mental disorder that affects about 1% of the world’s population. According to the World Health Organization (WHO), schizophrenia is estimated to affect about 24 million people worldwide. Currently approved treatments for schizophrenia include Novartis’ (NVS) Clozaril, Pfizer’s (PFE) Geodon, AstraZeneca’s (AZN) Seroquel, Risperdal, Eli Lilly’s (LLY) Zyprexa, and Bristol-Myers Squibbs’ (BMY) Abilify.
We are pleased to see that Cypress Bioscience is working on expanding its pipeline. The company derives revenues primarily from its lead product Savella, which received US Food and Drug Administration (FDA) approval in January 2009 for fibromyalgia. Cypress Bioscience intends to use its available cash balance for the upfront payment of $30 million for the schizophrenia candidate. We currently have a Neutral recommendation on the stock.
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