Cypress Bioscience Inc. In-Licenses BioLineRx Ltd.'s Novel Antipsychotic

SAN DIEGO, CA--(Marketwire - June 20, 2010) - Cypress Bioscience, Inc. (NASDAQ: CYPB) announced that Cypress has entered into an exclusive North American license for the development and commercialization of BioLineRx’s novel antipsychotic (BL-1020, hereafter, CYP-1020), a potential breakthrough treatment for schizophrenia. Specific terms of the transaction were not disclosed, but the total upfront payment to BioLineRx was $30 million, with total potential clinical and regulatory milestones of up to $160 million through to approval in the United States (the majority of which are related to improvement in cognition), potential commercial milestones of $85 million, and a potential additional $90 million associated with approval for additional indications in the United States or for approval in other countries in North America. In addition, Cypress will fund all continuing development activities and pay BioLineRx a royalty based on applicable sales.

“This agreement reflects our renewed strategic focus on R&D, where we have successfully demonstrated leadership, creativity and a competitive advantage,” said Jay D Kranzler, MD, PhD, Chairman and Chief Executive Officer of Cypress Bioscience. “This transaction represents a step down a path that we have successfully navigated before -- late stage, innovative drug development of a novel compound to address a significant unmet medical need. From fibromyalgia, and our success with Savella®, we believe Cypress has the experience and expertise required to successfully continue the development of CYP-1020, a novel antipsychotic that has the potential to address both the psychotic symptoms and cognitive deficits associated with schizophrenia. CYP-1020’s data to date is compelling and we believe that it has the potential to set a new standard in the field as a first-line antipsychotic.”

“This licensing agreement is a reflection of BioLineRx’s proven business model, which focuses on conducting high-quality proof of concept programs with novel compounds and then partnering with companies which have the clinical and commercial expertise to help fully realize their potential. We believe that CYP-1020 is especially exciting, insofar as the cognitive impairments associated with schizophrenia reflect such a dramatic unmet medical need,” said Kinneret Savitsky, PhD, Chief Executive Officer of BioLineRx.

Carol Tamminga MD, Professor of Psychiatry at the University of Texas Southwestern, a specialist in schizophrenia and translational neuroscience, and a BioLineRx consultant, said, “Patients with schizophrenia demonstrate symptoms in several functional domains, including psychosis and cognitive impairment. While antipsychotic therapies improve psychosis, there are no medications that affect cognition. CYP-1020 is a new antipsychotic drug candidate designed to reduce psychosis and augment cognition. Importantly, a recent proof of concept trial showed that CYP-1020 not only reduced psychosis compared to placebo, but it also improved cognition as compared to both placebo and an active control. This is a remarkable finding and will generate enormous enthusiasm in the field, if it can be replicated and its implications for psychosocial function demonstrated.”

As a result of funds received from the Office of Chief Scientist of the Ministry of Industry, Trade and Labor of the State of Israel, or the OCS, in respect to BioLineRx’s preclinical and clinical program related to CYP-1020, the effectiveness of the license agreement is subject to the consent of the OCS and OCS may condition providing its consent on the parties’ agreeing to modifications in the license agreement. Cypress and BioLineRx have agreed to work together to attempt to secure OCS approval on terms that minimize financial and non-financial obligations on the parties that may be imposed as a condition to receipt of the OCS consent. Cypress is not required to agree to any modifications to the license agreement that would have, or would be likely to have, a material adverse impact on its rights and obligations under the license agreement, and whether OCS provides its consent on terms acceptable to Cypress, and the timing of any such consent, cannot be estimated at this time. BioLineRx has agreed that it will assume sole responsibility for any financial obligations imposed by the OCS. In addition, the upfront payment was placed into an escrow account pending receipt of a satisfactory OCS consent and effectiveness of the license agreement.

CYP-1020 Phase 2b Trial Design

BioLineRx designed and conducted a six week, double blind, placebo and active-comparator (risperidone) controlled multisite phase 2b clinical trial. The phase 2b EAGLE (Effective Antipsychosis via GABA Level Enhancement) study was conducted under a U.S. Food and Drug Administration Investigational New Drug Application (IND) at 40 sites in the U.S., Europe and India and included patients suffering from acute exacerbation of schizophrenia. In this six week study, 363 patients were randomized equally to treatment with low (10 mg/day) or high (20-30mg/day) dose of CYP-1020, risperidone (2-8mg/day) or placebo.

The study was designed to demonstrate statistically significant superiority of CYP-1020 to placebo on the primary efficacy measure, the change from baseline in the total score of the Positive and Negative Symptoms of Schizophrenia (PANSS). Risperidone at a dose of 2-8 mg was included as a positive control to validate the trial results.

Cognitive function in the EAGLE trial was measured by the Brief Assessment of Cognition in Schizophrenia (BACS) neuropsychological battery. The BACS test battery assesses a variety of aspects of cognition, including: verbal memory, working memory, motor speed, verbal fluency, attention and speed of information processing, and executive functioning. All of these functions are significantly impaired in patients with schizophrenia(1).

CYP-1020 Phase 2b Data

Results of the phase 2b EAGLE study demonstrated that CYP-1020 at the 20-30mg dose range exhibited clinically relevant and statistically significant improvement on the cognition endpoint assessed using the BACS neuropsychological test battery. The 20-30mg dose range of CYP-1020 was superior to both risperidone and placebo at endpoint on the BACS total score (p=0.027 for both), with positive trends in all subsets within the BACS.

CYP-1020 was also effective as a treatment for the other symptoms of acute schizophrenia exacerbation, as measured by the Positive and Negative Symptom Scale (PANSS). The CYP-1020 high dose group (20-30mg/day) experienced a statistically significant reduction in the PANSS from baseline versus placebo (LS mean -23.6 vs. -14.4; p=0.002). The superiority of CYP-1020 (20-30mg/day) over placebo was also supported by additional secondary efficacy measures such as the clinical global impression of severity (CGI-S) and change (CGI-C).

The incidence of serious adverse events was low in the CYP-1020 (20-30mg/day) group (0%) compared to risperidone (3.3%) and placebo (6.5%). Discontinuations due to adverse events (AEs) were similar in the CYP-1020 (20-30mg/day) group and in the placebo group (4.3%) but higher in the risperidone group (8.8%). There were no statistically significant or clinically relevant metabolic related AEs including body weight gain, glucose increases, or changes in lipids. The incidence of cardiovascular, sexual, psychiatric, autonomic and gastrointestinal AEs was low and did not increase compared to placebo. There were no statistically significant or clinically relevant changes in subject electrocardiography (ECG), laboratory or vital signs (blood pressure, heart rate, temperature).

Recent results from an extension trial showed that patients receiving CYP-1020 (20-30mg/day) for six additional weeks maintained the improvements on the PANSS and CGI that had been observed after the initial six weeks of treatment and, more importantly, showed continuing improvement in cognitive function as assessed by the BACS. The 12 weeks of treatment were not associated with any increased toxicities.

About CYP-1020

CYP-1020 (formerly BL-1020) is a first-in-class GABA-enhanced antipsychotic that combines dopamine antagonism with GABAergic activity. CYP-1020’s dopamine antagonism reflects a well-established pathway to improve the psychotic symptoms of schizophrenia. Furthermore, both preclinical and clinical data suggest that CYP-1020’s GABA enhancement may provide the basis for improved cognition

About Schizophrenia

Schizophrenia is a severe mental disorder affecting about one percent of the world’s population. It is characterized by profound disruptions in thinking, affecting language, perception, and the sense of self(2). According to World Health Organization (WHO) estimates, schizophrenia affects approximately 24 million people worldwide. The symptoms of schizophrenia fall into three broad categories: positive symptoms, negative symptoms, and cognitive symptoms. Positive symptoms are psychotic behaviors not seen in healthy people, such as hallucinations and delusions. Negative symptoms are associated with disruption to normal behavior and emotion, such as a lack of ability to sustain planned activity or a lack of pleasure in everyday life. Cognitive symptoms include poor “executive functioning” (the ability to understand information and use it to make decisions), trouble focusing or paying attention, and problems with “working memory” (the ability to use information immediately after learning it)(3).

Cognitive dysfunction is a core deficit among patients with schizophrenia, and is reflected in their difficulty with memory, attention, and problem solving. Its impact upon individuals suffering from schizophrenia is profound and frequently results in disabilities in social, occupational, or daily functioning, including the frequent inability to maintain employment. Currently available antipsychotics have shown little to no ability to improve cognition and there are currently no marketed products available to treat the cognitive symptoms of the disease.

Financial Information
Per Cypress’ un-audited financials, it ended the first quarter of 2010 with approximately $137 million in cash -- the upfront payment of $30 million will be paid from that amount.

Conference Call Information

Cypress Bioscience will hold a conference call at 10AM EST on Monday, June 21st. Dr. Jay Kranzler, CEO and Chairman of the Board of Directors and Sabrina Johnson, Executive Vice President, COO and CFO of Cypress Bioscience, will participate in the call, as will Dr. Richard Keefe, Professor of Psychiatry and Behavioral Sciences at Duke University Medical Center.

Date: Monday June 21, 2010 Time: 10AM EST Conference call numbers: Toll free: (866) 814-1916 International: (703) 639-1360 Audio Webcast: http://wcc.webeventservices.com/r.htm?e=222569&s=1&k=F226AEC9EE93B609172A22207B00F480&cb=blank&tile=false 

A replay of the conference call will be available for five days and can be accessed by dialing (888) 266-2081or (703) 925-2533 Access code: 1465408.

About BioLineRx

BioLineRx Ltd. is a publicly-traded (TASE: BLRX) biopharmaceutical development company based in Jerusalem, Israel with US offices in Rockville, Maryland. BioLineRx is dedicated to identifying, in-licensing and developing therapeutic candidates for unmet medical needs or that have advantages over currently available therapies. BioLineRx’s current development pipeline consists of three clinical stage candidates as well as seven candidates in various pre-clinical development stages spanning a variety of indications including central nervous system diseases, oncology, cardiovascular and autoimmune diseases. One of BioLineRx’s lead compounds, BL-1040, has recently been out-licensed to Ikaria Holdings Inc. for a total deal value of $282.5 million. For more information about BioLineRx, please visit www.biolinerx.com.

About Cypress Bioscience

Cypress Bioscience, Inc develops and commercializes therapeutics and personalized medicine services to facilitate improved and individualized patient care. Cypress’ goal is to address the evolving needs of specialist physicians and their patients by identifying unmet medical needs in the areas of pain, rheumatology, and central nervous system disorders, including challenging disorders such as fibromyalgia, rheumatoid arthritis, lupus and, with the license agreement with BioLineRx, schizophrenia. Current marketed products include Savella® (milnacipran HCI) and the Avise PG(SM) and Avise MCV(SM) therapeutic monitoring, diagnostic and prognostic testing services for rheumatoid arthritis. Development stage products include, with the license agreement with BioLineRx, CYP-1020 for schizophrenia, as well as AVISE-SLE(SM), a lupus diagnostic testing service.

For more information about Cypress, please visit www.cypressbio.com.

Forward-Looking Statements
This press release, as well as Cypress’ SEC filings and website at http://www.cypressbio.com, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements with respect to the effectiveness of the license agreement, the parties’ receiving consent from the OCS to the license agreement and the terms and timing of that consent, CYP-1020 and its potential to treat the psychotic symptoms and cognitive deficits associated with schizophrenia and become a new standard as a first-line antipsychotic, Cypress’s ability to successfully develop and commercialize CYP-1020, and the ability of Cypress to achieve regulatory, commercial and other milestones under the license agreement and to sell products that cause royalties to be payable under the license agreement. Actual results could vary materially from those described as a result of a number of factors, including the risk that the OCS may not consent to the license agreement on terms and with timing that are acceptable to Cypress, which could cause the license agreement to not become effective, and risks involved with the high uncertainty that characterizes research and development activities in general, particularly those of drug development, including the risks that CYP-1020 may not demonstrate adequate safety and/or efficacy in later clinical trials to continue with its development, may not have adequate intellectual property right protection to support its continued development in the Cypress territory, may be unable to obtain FDA or similar regulatory approval as a drug candidate for any of many reasons relating to the regulatory approval process, or may address a commercial market that is smaller than currently anticipated by Cypress and that does not support its continued development, or that Cypress may otherwise fail to successfully develop and commercialize CYP-1020 in its territory, and other risks and uncertainties described in Cypress’ most recent Annual Report on Form 10-K, most recent Quarterly Report on Form 10-Q and any subsequent SEC filings. You are urged to consider statements that include the words “may,” “will,” “would,” “could,” “should,” “believes,” “potential,” “expects,” “plans,” “anticipates,” “intends,” or the negative of those words or other comparable words to be uncertain and forward-looking.
The statements in this press release speak only as the date hereof, and neither Cypress nor BioLineRx undertakes any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

(1) Keefe et al. (2004). The Brief Assessment of Cognition in Schizophrenia: reliability, sensitivity, and comparison to standard neuropsychological battery. Schizophrenia Research, 68, 283-297.

(2) Schizophrenia, World Health Organisation, http://www.who.int/topics/schizophrenia/en/

(3) What are the symptoms of schizophrenia? National Institute of Mental Health, http://www.nimh.nih.gov/health/publications/schizophrenia/what-are-the-symptoms-of-schizophrenia.shtml