SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2001, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________________ to
_________________
Commission File Number 0-12943
CYPRESS BIOSCIENCE, INC.
(Exact Name of Registrant as specified in its charter)
DELAWARE 22-2389839
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4350 Executive Drive, Suite 325, San Diego, California 92121
(Address of principal executive offices) (zip code)
(858) 452-2323
(Registrant's telephone number including area code)
__________________________________
Indicate by check (X) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
At August 9, 2001, 6,342,553 shares of Common Stock of the Registrant were
outstanding.
This filing, without exhibits, contains 15 pages.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
----
Item 1 - Consolidated Balance Sheets as of
June 30, 2001 (unaudited) and December 31, 2000..................................... 3
Consolidated Statements of Operations for the three and
six months ended June 30, 2001 and 2000 (unaudited)................................. 4
Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000 (unaudited)............................................ 5
Notes to Consolidated Financial Statements (unaudited).................................. 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................ 9
Item 3 - Quantitative and Qualitative Disclosures About Market Risk............................... 12
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings........................................................................ 13
Item 2 - Changes in Securities and Use of Proceeds............................................... 13
Item 3 - Defaults Upon Senior Securities.......................................................... 13
Item 4 - Submission of Matters to a Vote of Security Holders ..................................... 13
Item 5 - Other Information........................................................................ 14
Item 6 - Exhibits and Reports on Form 8-K......................................................... 14
Signatures........................................................................................ 15
2
CYPRESS BIOSCIENCE, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
----------------- ---------------
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $ 10,169,943 $ 7,102,317
Restricted cash 1,366,584 -
Accounts receivable from agreement with Fresenius 15,901 439,315
Prepaid expenses 73,622 104,178
Assets held for sale - 26,739
Debt acquisition costs 34,898 76,612
------------ ------------
Total current assets 11,660,948 7,749,161
Property and equipment, net 128,849 102,048
Other assets 51,172 40,062
------------ ------------
Total assets $ 11,840,969 $ 7,891,271
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 280,742 $ 936,251
Accrued compensation 74,916 171,360
Accrued liabilities 458,761 267,182
Current portion of deferred revenue from restructured
Fresenius agreement 1,600,000 -
Current portion of convertible debentures - 275,000
Current portion of long-term obligations 1,346,161 1,578,562
------------ ------------
Total current liabilities 3,760,580 3,228,355
Long term portion of deferred revenue from restructured Fresenius
agreement 5,600,000 -
Long-term obligation, net of current portion - 563,688
Stockholders' equity:
Common stock, $.02 par value; 75,000,000 shares authorized,
6,342,553 and 6,105,350 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively 126,851 122,107
Additional paid-in capital 100,756,583 100,269,714
Accumulated deficit (98,403,045) (96,292,593)
------------ ------------
Total stockholders' equity 2,480,389 4,099,228
------------ ------------
Total liabilities and stockholders' equity $ 11,840,969 $ 7,891,271
============ ============
See accompanying Notes to Consolidated Financial Statements.
Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles.
3
CYPRESS BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
------------ -------------- --------------- ---------------
Revenue:
Revenue from restructured $ 400,000 $ - $ 800,000 $ -
Fresenius agreement
Revenue from Fresenius
agreement - 847,878 - 1,414,745
---------- ------------ ----------- -----------
Total revenue 400,000 847,878 800,000 1,414,745
Costs and expenses:
Production costs - 115,859 - 179,569
Sales and marketing - 1,637,735 - 3,560,342
Research and development 285,786 435,119 457,009 1,282,219
General and administrative 1,109,258 748,271 2,551,542 1,480,108
---------- ------------ ----------- -----------
Total costs and expenses 1,395,044 2,936,984 3,008,551 6,502,238
Other income (expense):
Interest and other
income, net 140,005 198,154 272,295 351,855
Interest expense (75,436) (157,742) (174,196) (294,466)
---------- ------------ ----------- -----------
64,569 40,412 98,099 57,389
---------- ------------ ----------- -----------
Net loss $ (930,475) $(2,048,694) $(2,110,452) $(5,030,104)
========== =========== =========== ===========
Net loss per share $ (0.15) $ (0.34) $(0.34) $ (0.84)
========== =========== =========== ===========
Shares used in computing
net loss per share 6,203,526 6,080,986 6,155,745 6,016,633
========== =========== =========== ===========
See accompanying Notes to Consolidated Financial Statements.
4
CYPRESS BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2001 2000
------------- ----------------
Operating Activities
Net loss $(2,110,452) $(5,030,104)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 39,209 55,238
Loss on sale of asset to Fresenius 16,714 -
Assets held for sale (1,975) -
Stock and stock options issued for services and
expenses 345,966 107,739
Deferred revenue from Fresenius (800,000) -
Changes in operating assets and liabilities, net (77,218) 154,536
----------- ------------
Net cash used by operating activities (2,587,756) (4,712,591)
Investing Activities
Proceeds from restructure of Fresenius agreement 8,000,000 -
Proceeds from sale of assets to Fresenius 12,000 -
Purchase of equipment (64,592) (11,708)
----------- ------------
Net cash provided by (used by) investing activities 7,947,408 (11,708)
Financing Activities
Payment of notes payable (1,071,089) (246,235)
Cash restricted for debt repayment (1,366,584) -
Deferred financing costs - 82,415
Proceeds from exercise of stock options and warrants 145,647 4,453,527
Payment of capital lease obligations - (3,001)
----------- ------------
Net cash provided by (used by) financing activities (2,292,026) 4,286,706
Increase in cash and cash equivalents 3,067,626 (437,593)
Cash and cash equivalents at beginning of period 7,102,317 11,569,966
----------- ------------
Cash and cash equivalents at end of period $10,169,943 $11,132,373
=========== ===========
Supplemental disclosure of cash flow information
Interest paid $ 137,461 $ 205,469
=========== ===========
See accompanying Notes to Consolidated Financial Statements.
5
CYPRESS BIOSCIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Formation and Business of the Company
The accompanying consolidated financial statements have been prepared by us
(the management of Cypress Bioscience, Inc.) without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (the "SEC").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the SEC.
The consolidated financial statements include our accounts and those of our
wholly owned subsidiaries. All intercompany accounts and transactions have been
eliminated. In the opinion of our management, all adjustments necessary for a
fair presentation of the accompanying unaudited financial statements are
reflected herein. All such adjustments are normal and recurring in nature.
Interim results are not necessarily indicative of results for the full year.
For more complete financial information, these consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
included in our 2000 Annual Report on Form 10-K filed with the SEC.
We are focusing our expertise and resources on developing products that
improve the diagnosis and treatment of patients with fibromyalgia syndrome (FMS)
and other pain disorders. We recently licensed our first drug candidate for
development in the treatment of FMS, and have on-going internal research
programs for FMS. In addition, we are evaluating our alternatives with respect
to Cyplex(TM), a potential alternative to traditional platelet transfusions. We
have in the past evaluated various possible strategic transactions, including
the potential acquisitions of products, technologies and companies, and we
expect to continue to do so in the future.
2. Fresenius Agreements
Effective January 1, 2001, Cypress restructured its PROSORBA column
partnership agreement with Fresenius AG of Bad Homburg, Germany and its U.S.
subsidiary, Fresenius HemoCare, Inc. (Fresenius). Under the revised agreement,
Fresenius is responsible for all PROSORBA column research and development,
sales, marketing and clinical efforts worldwide. Cypress received an upfront
payment of $8.0 million for certain assets and a partial prepayment of royalties
related to the PROSORBA column. Cypress has the potential to receive future
royalties for the life of the PROSORBA column if the sales exceed certain
thresholds. The restructured agreement eliminates the profit and expense sharing
arrangement with Fresenius for PROSORBA column sales and substitutes royalty
provisions. Revenues from the first two quarters of 2000 consisted of
reimbursement to Cypress by Fresenius of allowable expenses under the original
agreement for royalty, research and development and sales and marketing expenses
plus 50% share of any remaining net profit under the agreement. Revenues for the
first two quarters of 2001 consisted of the amortization of the upfront payment
from the restructured Fresenius agreement on a straight-line basis over a five-
year term. The unamortized upfront payment amount is being recorded as deferred
revenue from the restructured Fresenius agreement. As a result, revenues for the
2000 and 2001 periods are not directly comparable.
6
3. Net Loss Per Share
The computation of net loss per share is based on the weighted average
number of shares of common stock outstanding for each period. Common stock
equivalents related to options, warrants and convertible debentures (which
matured in March 2001 and are no longer outstanding) are excluded, as their
effect is antidilutive.
4. Long Term Obligation
The long-term obligation and current portion of long term obligations
consist of a fully amortizing term loan that will be repaid in June 2002. Prior
to the sale of PROSORBA related assets to Fresenius the loan was secured by
certain assets of the Company. In January 2001, the debt covenants were
restructured and the loan was secured with a $2.1 million interest bearing
restricted cash account held as collateral by the lender. This interest bearing
restricted cash will be used to retire the loan over its term. The 7%
convertible debentures, which were due in March 2001, were repaid in full, in
accordance with the terms of the debenture agreement, in the amount of $275,000.
5. Equity
In June 2001, we received proceeds of approximately $146,000 in cash and
$190,000 in a full recourse interest-bearing note from the exercise of options
to purchase 134,248 shares of the Company's common stock. These shares were
exercised in accordance with the terms of an stock option cancel and regrant
program. Participants in the cancel and regrant program were required to forfeit
existing options for new options at the exercise price equal to the fair market
value of the common stock as of the date of the regrant. The new options have a
four-year term as opposed to the original options, which had a ten-year term. In
addition, participants were required to immediately exercise 20% of the
regranted options. As a result of the option cancel and regrant program, which
caused the options to be accounted as variable options, approximately $194,000,
of expense was recorded this quarter as additional paid in capital and general
and administrative expense to reflect the effect of the increase in market
price of the regranted and outstanding options.
6. Subsequent Event
In August 2001, Cypress signed a license agreement with Pierre Fabre
Medicament (Pierre Fabre), the pharmaceutical division of bioMerieux Pierre
Fabre of Paris, France. The agreement provides Cypress with an exclusive
license to develop and sell any product with the compound, milnacipran, as an
active ingredient, for the treatment of FMS and related chronic pain syndromes
in the United States and Canada. The agreement also gives Cypress an option to
expand the license to include other indications.
Cypress will pay Pierre Fabre an upfront payment to license the compound.
Additional payments to Pierre Fabre will be based on meeting certain clinical
and regulatory milestones. If the drug is commercialized, Pierre Fabre will
manufacture the active ingredient used in the
7
commercial product and Cypress will pay Pierre Fabre a transfer price and
royalties based on net sales. Pierre Fabre retains the right to sell products
developed by Cypress for the FMS indication outside of North America and will
pay Cypress a royalty based on net sales for such marketing rights.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934 that involve risks and uncertainties.
Our actual results could differ materially from those discussed below and
elsewhere in this 10Q. Factors that could cause or contribute to such
differences include, without limitation, those discussed in this section, as
well as other sections of this 10Q, and those discussed in the our Annual Report
on Form 10-K for the year ended December 31, 2000.
Company Overview
We are focusing our expertise and resources on developing products that
improve the diagnosis and treatment of patients with fibromyalgia syndrome (FMS)
and other pain disorders. We recently licensed our first drug candidate for
development in the treatment of FMS, and have on-going internal research
programs for FMS. In addition, we are evaluating our alternatives with respect
to Cyplex(TM), a potential alternative to traditional platelet transfusions. We
have in the past evaluated various possible strategic transactions, including
the potential acquisitions of products, technologies and companies, and we
expect to continue to do so in the future.
As of June 30, 2001, we had working capital of approximately $7.9 million
and an accumulated deficit of approximately $98.4 million. Our future success
depends on our ability to develop and market new products for the treatment of
FMS or other pain disorders as well as the success of Fresenius in marketing the
PROSORBA(R) column.
On January 19, 2001, we sold to Fresenius Hemocare, Inc. (Fresenius) the
United States Food and Drug Administration (FDA) pre-market approvals and
applications for the PROSORBA column as well as our furniture and equipment used
in connection with research and development, clinical trials, quality control,
and sales and marketing efforts associated with the PROSORBA column. In
addition, Fresenius assumed our liability under a lease for a facility in
Redmond, Washington and our obligations under contracts relating to the PROSORBA
column, including our royalty obligations under assigned patent licenses. We
also assigned a distribution agreement for the territory of Canada to Fresenius.
We retained ownership of the patents and trademarks for the PROSORBA column.
In connection with the sale of assets, we restructured the existing license
agreement with Fresenius so that Fresenius assumed responsibility for the
research and development, clinical trials and sales and marketing of the
PROSORBA column in addition to the manufacturing responsibility that Fresenius
has had since April 1999. The restructured agreement eliminates the profit
sharing and expense sharing provisions and substitutes royalty provisions. At
the closing, Fresenius paid us a license fee, which represents a prepayment of
royalties for 10,000 columns in each of the five years beginning with 2001. In
addition, we are entitled to receive royalties on any sales of columns in excess
of the 10,000 columns within any of the five years and for all column sales
beyond the five-year period. The license fee is not refundable to Fresenius
under any circumstances. Fresenius paid approximately $8.0 million in cash for
the assets, including the pre-marketing approval, and the license fee upon
consummation of the transaction.
9
Prior to the amendment of the license and distribution agreement, the
agreement entered into in March 1999 governed our relationship with Fresenius.
The original agreement provided for the co-marketing and distribution of the
PROSORBA column in the United States, and for the registration and distribution
of the PROSORBA column in Europe, Latin America and subject to certain
conditions, Japan and select Asian countries. The terms of the agreement with
Fresenius specified joint efforts to introduce and market the PROSORBA column in
the United States, with Fresenius having exclusive distribution rights and
responsibility for clinical trials and registration overseas. The agreement
included a 50/50 profit split in the territories other than the United States.
The profit sharing was 50/50 in the United States for both the PROSORBA column
and disposables sold by Fresenius for use with the PROSORBA column.
Revenue from March 1999 when we entered into the original agreement with
Fresenius and prior to the January 2001 revised agreement consisted of our pro
rata share of PROSORBA column sales by Fresenius. Our pro rata share of
PROSORBA column sales was determined as the total of allowable expenses incurred
by us for royalty, research and development and sales and marketing expenses
plus our share of any remaining net profit generated under the agreement. Our
share of remaining net profit was calculated as the gross profit from PROSORBA
column sales less reimbursed expenses incurred by Fresenius and us.
Results of Operations
Revenues for the quarter and six months ended June 30, 2001 totaled
$400,000 and $800,000, respectively, compared to $848,000 and $1.4 million for
the same period of 2000. Revenues for the first three and six months of 2001
consisted of amortization of the upfront payment of approximately $8.0 million
we received under the restructured agreement with Fresenius. This upfront
payment is being recognized as revenues on a straight-line basis over a five-
year term. The unamortized amount of the upfront payment is recorded as
deferred revenues. In contrast, revenues for the first quarter of 2000
consisted of reimbursement to us by Fresenius of our allowable expenses and our
share of profits from the sale of the PROSORBA column under the original
agreement. As a result, revenues for 2000 and 2001 periods are not directly
comparable. In addition, we do not anticipate receiving any revenues in the
third quarter other than those that will be recorded based on our restructured
agreement with Fresenius. Therefore, we expect that our revenue for the third
quarter will be $400,000.
Research and development expenses for the quarter and six-month period
ended June 30, 2001 were $286,000 and $457,000, respectively, compared to
$435,000 and $1.3 million for the comparable periods in 2000. The decrease for
the quarter and six-month period ended June 30, 2001 compared to the prior
periods was due to the assumption of the research and development activities
related to the PROSORBA column by Fresenius. Research and development expenses
incurred for the quarter ended June 30, 2001 consisted of expenditures for the
FMS and Cyplex programs.
10
We recently licensed our first drug candidate, milnacipran, for development
in the treatment of FMS. Under the terms of the licensing agreement, Cypress
will pay Pierre Fabre Medicament (Pierre Fabre), the pharmaceutical division of
bioMeieux Pierre Fabre of Paris, France, an upfront payment of $750,000 in the
third quarter of 2001. Assuming appropriate regulatory approvals, we expect to
begin phase II clinical trials with milnacipran in FMS in early 2002. In
addition, during the second quarter of 2001, we launched our genomic research
program and began implementation of a database for our physician and patient
registries. As a result, we anticipate that research and development costs will
increase in future periods.
Production costs incurred in 2000 were a result of royalties paid by us to
third parties based on total PROSORBA column sales. We are no longer
responsible for royalty payments to these third parties as Fresenius assumed
these obligations under the restructured agreement.
Sales and marketing expenses totaled $1.6 million and $3.6 million for the
second quarter and six-monthly period ended June 30, 2000. There was no sales
and marketing expenses incurred during 2001 due to the assumption of the sales
and marketing efforts associated with the PROSORBA column by Fresenius, in
accordance with the restructured agreement. We do not anticipate incurring
marketing expenses until we are able to commercialize product for FMS or other
pain disorders.
General and administrative expenses for the quarter and six month period
ended June 30, 2001 were $1.1 million and $2.6 million, respectively, compared
to $748,000 and $1.5 million for the same time periods in 2000. The increase for
the quarter of $361,000 and six month period of $1.1 million in general and
administrative expenses was primarily due to business development activity
associated completion of the research agreement with Georgetown University and
effort to license drug candidates for the treatment of the FMS. We recorded a
non-cash expense of approximately $194,000 in the second quarter of 2001 in
connection with our stock option cancel and regrant program. We will continue
to record a similar non-cash transaction in future quarters to reflect the
difference between the exercise price of the regranted options, which is $2.50,
and the fair market value of the options until each of the options held under
the cancel and regrant program has been exercised or is terminated. We expect
general and administrative costs will fluctuate from quarter to quarter
depending on impact of the stock option and regrant program.
Liquidity and Capital Resources
Our cash and cash equivalents balance at June 30, 2001 totaled $10.2
million, compared to $7.1 million at December 31, 2000. The net increase in
cash and cash equivalents was primarily due to the upfront payment from the
restructured agreement with Fresenius, partially offset by cash used in
operations and repayments of debt. Working capital at June 30, 2001 totaled
$7.9 million, compared to $4.5 million at December 31, 2000.
On August 1, 2001, we entered into a license and trademark agreement with
Pierre Fabre. The agreement provides us with an exclusive license to
develop and sell any product with the compound, milnacipran, as an active
ingredient, for the treatment of FMS and related chronic pain syndromes in the
United States and Canada. We also have an option to expand the license to
include other indications. We will pay Pierre Fabre an upfront
11
payment to license the compound with the first payment of $750,000 to be made in
the third quarter of 2001. Additional payments to Pierre Fabre will be based on
meeting certain clinical and regulatory milestones. If the product is
commercialized, Pierre Fabre will manufacture the active ingredient used in the
commercial product and Cypress will pay Pierre Fabre a transfer price and
royalties based on net sales. Pierre Fabre retains the right to sell products
developed by Cypress for the FMS indication outside of North America and will
pay Cypress a royalty based on net sales for such marketing rights.
We believe our cash and cash equivalents balance on June 30, 2001, is
sufficient to fund operations through mid-2002. We are actively seeking
financing and considering possible strategic transactions to increase our cash
position. In order to successfully develop the drug candidate that we have
licensed from Pierre Fabre for the treatment of FMS and in order to acquire and
develop any additional drug candidates for the treatment of FMS or other pain
disorders, we will be required to raise additional capital. The amount of
capital we require is dependent upon many factors, including the following: the
cost of the clinical trials for the drug candidate that we have licensed from
Pierre Fabre for the treatment of FMS, costs of in-licensing additional drug
candidates for our FMS program, the costs associated with the clinical trials
designed for any new developed and/or acquired drug candidate, results of
research and development efforts, the FDA regulatory process, costs of
commercialization of products and potential competitive and technological
advances and levels of product sales, and the ability of Fresenius to
successfully market the PROSORBA column for the treatment of RA. Because we are
unable to predict the outcome of the foregoing factors, some of which are beyond
our control, we are unable to estimate with certainty our mid to long-term
capital needs. Although we are seeking to raise additional capital through
equity or debt sources, we may not be able to raise additional capital through
such sources and even if we do raise funds, these funds may not allow us to
maintain our current and planned operations. And if we are able to raise capital
through an equity financing, due to the recent trading price of our stock, any
financing could substantially dilute our existing stockholders. If we are unable
to obtain additional capital, we will be required to delay, scale back or
eliminate our research activities associated with the drug candidate we have
licensed from Pierre Fabre, our activities related to attempting to acquire
additional drug candidates for the treatment of FMS or other pain disorders and
our recent investor relations activities.
Quantitative and Qualitative Disclosure About Market Risk
We invest our excess cash in United States government securities and money
market funds with strong credit ratings. As a result, our interest income is
most sensitive to changes in the general level of United States interest rates.
We do not use derivative financial instruments, derivative commodity instruments
or other market risk sensitive instruments, positions or transactions in any
material fashion. Accordingly, we believe that, while the investment-grade
securities we hold are subject to changes in the financial standing of the
issuer of such securities, we are not subject to any material risks arising from
changes in interest rates, foreign currency exchange rates, commodity prices,
equity prices or other market changes that affect market risk sensitive
instruments.
12
PART II
Item 1 - Legal Proceedings
From time to time we are involved in certain litigation arising out of our
operations. We are not currently engaged in any legal proceedings that we
expect would materially harm our business or financial condition.
Item 2 - Changes in Securities and Use of Proceeds
Not applicable
Item 3 - Defaults Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders (the "Annual Meeting") of the Company
was held on July 27, 2001. The Company had 6,911,900 shares of common stock
outstanding and entitled to vote as of June 13, 2001, the date of record of the
meeting. At the meeting holders of a total of 4,800,166 shares of common stock
were present in person or represented by proxy. The following sets forth a brief
description of each matter voted upon at the Annual Meeting and the results of
the voting on each such matter:
(1) For the elections of the nominees as class of 2004 directors:
For Withheld Authority or Against
Samuel D. Anderson 4,746,434 53,732
Jack Vaughn 4,746,434 53,732
The Company's Board of Directors is comprised of the individuals elected this
year and the following directors completing the following terms: Larry J.
Kessel, M.D. and Charles Nemeroff, M.D., Ph.D whose terms expire in 2002,
Sheldon Drobny, Martin B. Keller, M.D and Jay D. Kranzler, M.D., Ph.D whose
terms expire in 2003.
(2) To ratify the Board's selection of Ernst & Young LLP to continue as the
Company's independent auditors for the fiscal year ending December 31, 2001.
Stockholder ratification of the selection of Ernst & Young as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Ernst & Young to the
stockholders for ratification as a matter of good corporate practice.
For Against Abstained
4,781,135 14,329 4,702
13
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 10.1 Employment Agreement between the Company and John
Bunfilio, M.D., Ph.D dated June 18, 2001
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Cypress Bioscience, Inc.
August 14, 2001 /s/ Jay D. Kranzler
----------------------------
Chief Executive Officer,
Chief Financial Officer and
Chairman of the Board
(Principal Executive Officer and
Principal Financial and
Accounting Officer)
15