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Biotech / Medical : CYPB - Cypress BioScience -- Ignore unavailable to you. Want to Upgrade?

To: John S. Baker who wrote (351)	7/12/1998 12:45:00 PM
From: muddphudd	Read Replies (1) \| Respond to of 586

I posted the article on the Yahoo:CYPB board. Here is Part I: CYPRESS BIOSCIENCE, INC. \| Jay Kranzler By the time Jay Kranzler took the helm of Cypress Bioscience and moved it to San Diego two years ago, people had long since dismissed the biotech as a shady company with a product that was basically junk. Cypress, then known as Imre Corp., had gone through bruising patent disputes and an unhappy distribution relationship with Baxter International. Cypress had also attracted the attention of securities regulators. Its Prosorba column, a sort of blood filter, had been in use for more than a decade to treat an extremely unusual bleeding disorder -- a condition so rare that Cypress made barely any money from the device. Some doctors were skeptical that it worked at all. "Before January nobody wanted to talk about the Prosorba column," Kranzler said. "They all said it's black magic, a black box." But Kranzler, who previously headed San Diego's Cytel Corp., has resurrected Prosorba and turned the 39-employee company into one of the big biotech surprises of the first half of the year. In January, the company announced new data that suggest Prosorba is effective against rheumatoid arthritis -- the inflammation of the joints that afflicts millions. Though the device would probably be used only in severe cases, that could be many thousands of patients. The stock doubled, and Cypress started submitting materials to the Food and Drug Administration toward approval of Prosorba for rheumatoid arthritis. The company hopes to receive a decision from the FDA next year. Even sales of Prosorba for the bleeding disorder, known as idiopathic thrombocytopenic purpura, or ITP, have increased. Prosorba revenue reached $3.0 million last year after sinking to $1.1 million two years earlier, though the company remains unprofitable. "We still have a long, long way to go," Kranzler said. "But the momentum has started." The story of Prosorba goes back to the mid-'80s, when a graduate student at the University of Washington developed the column as part of his work toward a Ph.D. thesis. The device is a 3 1/2 -inch tall cylinder that contains 200 milligrams of Protein A, a substance that is thought to act like a sponge to absorb harmful protein complexes that contribute to disease. A patient's blood is drawn from one arm, fed through the column, and then returned to the patient's other arm. The procedure takes about two hours, with ITP patients receiving six treatments and rheumatoid arthritis patients expected to receive 12. At first the graduate student experimented with the column on a cat with leukemia, and the work was successful enough to attract investors to support further development of the device. The new company, Imre, used the investors' funds to begin testing the column on AIDS patients, since some thought cat leukemia might in some ways parallel AIDS. No breakthrough in AIDS emerged, but the column proved effective in boosting patients' platelet counts, thus aiding in blood clotting and coagulation. That led to the 1987 FDA approval for the column's use in treating ITP, a condition that leads to serious bleeding after the body produces antibodies to destroy its own platelets. Over the next decade, however, the company failed to capitalize significantly on its discovery. In Prosorba's first five years on the market, Imre recorded just $7.8 million in revenue. And though sales increased somewhat in the mid-'90s, any gain was wiped out in a dismal 1996, when escalating costs and restructuring charges yielded a $15.5 million loss. ** sorry it didn't paste well.

To: John S. Baker who wrote (351)	7/12/1998 1:00:00 PM
From: muddphudd	Read Replies (2) \| Respond to of 586

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.