Here is part II:
Kranzler said the Securities and Exchange Commission started looking into
the company, whose low share price sometimes produces large percentage
swings. The management team left, and in December 1995 the board decided to
bring in Kranzler and move the company from Seattle to San Diego.
By then, Cypress' market capitalization was down to $26 million, near the
bottom of the list of San Diego's publicly traded biomedical companies. It
has since climbed to over $100 million.
The first step in the turnaround was reinvigorating the sales effort for
ITP. Kranzler started with a new study to show the device worked, and the
data showed that the device stopped or controlled bleeding in 65 percent of
the 26 patients. He terminated a distribution agreement with Baxter
International that hadn't gone well. Then the company backed off on the
hard-sell approach it had taken in the past.
"All we really did was take more of an R&D approach," said Debby Jo Blank,
who joined the company along with Kranzler as president and chief operating
officer. "Instead of going in trying to sell, we tried to build
relationships and do more consultation."
By the time Kranzler and Blank arrived, the company already had learned
that the device might help against rheumatoid arthritis. That discovery
came partly through luck.
A doctor in Coeur d'Alene, Idaho, Craig Wiesenhutter, had been using the
column to treat ITP patients when he encountered several patients with both
ITP and rheumatoid arthritis. When he treated them with the column, both
the ITP and arthritis symptoms were reduced. So he decided to do a small
study with additional arthritis patients.
It appeared to confirm his original observation. Nine of the 15 arthritis
patients responded to the treatment, and when Cypress received the results
the company decided to proceed with additional testing.
The company's study, which ended in January, showed that 45 percent of
patients who completed the study responded to the treatment. That was
encouraging enough for the company to stop the study early, with about 100
patients instead of the originally planned 268.
Because many patients will opt against the relatively intensive procedure
Prosorba requires, the company expects that it will only be used in severe
cases. But Kranzler figures that even a relatively small percentage of the
2.5 million rheumatoid arthritis patients in the United States could yield
50,000 to 200,000 patients. Current treatments tend to be expensive and are
sometimes ineffective.
One observer of local stocks, Bud Leedom of the San Diego Stock Report,
said the decision to put an early halt to the Prosorba trial was an
important show of confidence.
"When something like that happens, it really says something about the
integrity of the data," said Leedom, who recommended the stock in February.
Cypress' recent success also represents a comeback for the 40-year-old
Kranzler, who holds both a Ph.D. and a medical degree from Yale and who
first became notable locally as chief executive of Cytel Inc. When he
joined Cytel in 1989 after a stint at the McKinsey & Co. he was, at 30
years old, one of San Diego's youngest biotech chief executives.
Under Kranzler, Cytel grew from 30 employees to 170, though in his last
years there the company narrowed its focus and cut its head count to 110
people. He resigned in August 1995, saying the company's needs no longer
matched his talents.
In his first year at Cypress, Kranzler kept a low profile. It was only with
the release of the Prosorba data in January that the company started to
attract notice.
In addition to Prosorba, the company is also developing a platelet
substitute it calls Cyplex, the primary product of a company Cypress
acquired in late 1996. |
