It’s less than 10 days before Christmas, but San Diego’s life sciences community doesn’t seem to be ready for vacation. The business news wires have been crackling with reports of buyouts, rumored buyouts, deals, and major product launches. Fortunately, we’re here to sort it all out for you.

—As corporate courtships go, the unsolicited offer by New York’s Ramius group for San Diego’s Cypress Bioscience (NASDAQ: CYPB) was more tempestuous than romantic. But Ramius finally came up with a proposal that swept Cypress off its feet. At $6.50 a share, the hedge fund’s $255 million offer was 63 percent higher than the original proposal of $4 a share five months ago, and about 160 percent higher than Cypress’ share price of $2.50 on July 16, before the Ramius offer became public.

—Is Genoptix (NASDAQ: GXDX) negotiating with a secret suitor who wants to buy the Carlsbad, CA, medical diagnostic company? Bloomberg News reported that Genoptix has hired Barclays, the British investment bank, and buyout speculation has been driving the company’s stock higher. Genoptix runs a centralized laboratory that performs tests on blood samples of patients with blood disorders and cancers.

—Another Carlsbad company, Life Technologies, (NASDAQ: LIFE) has started selling what it calls the Ion Personal Genome Machine, a molecular diagnostic instrument for sequencing genomes. The first commercial sequencing machine uses semiconductor technology, rather than imaging, to sequence genes, and was developed by Ion Torrent Systems of Guilford, CT. The machine sells for a shade under $50,000, about one-tenth the price of today’s most high-powered gene sequencing instruments.

—San Diego’s Avalon Ventures has put about $1 million in funding to launch RQx Pharmaceuticals, which plans to develop a … Next Page »

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After months of rejected offers and dueling media statements, Cypress Bioscience (NASDAQ: CYPB) says today it has agreed to a buyout-and-merger deal that will combine the San Diego drug development company with Royalty Pharma, a New York firm that holds a revenue-generating portfolio of drug royalty interests.

Ramius V&O Acquisition, an affiliate of the $7.8 billion Ramius hedge fund group, upped its offer to acquire all outstanding shares of Cypress that it does not already own for $6.50 a share—or about $255 million on a fully diluted basis. The sweetened price represented an 8.3 percent increase over its previous offer, and was unanimously approved by the Cypress board, according to a statement.

The offer that Cypress finally accepted was about 63 percent higher than the original unsolicited buyout proposal at $4 a share that Ramius made in mid-July, and about 160 percent higher than the Cypress’ share price on July 16, the last trading day before the Ramius offer was publicly disclosed.

“Royalty Pharma has proven to be an extremely valuable partner in our acquisition of Cypress,” Ramius Partner and Managing Director Jeffrey Smith says in the statement. “Their expertise in investing in and acquiring royalty interests has allowed us to structure a unique and efficient transaction that we believe clearly maximizes value for all stockholders.”

“We are excited to add the Savella royalty to our diversified portfolio of leading biopharmaceutical royalties and look forward to working with … Next Page »

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Shares of San Diego’s Cypress Bioscience gained more than 20 percent in furious trading of nearly 4.8 million shares on Nasdaq—more than eight times the company’s recent average volume—after rejecting a new cash offer from the New York-based Ramius group of funds. In a statement today, Ramius and affiliates of Royalty Pharma Finance Trust said they had negotiated the terms of a definitive merger agreement with Cypress over the past few days at $6 a share—or about $232 million, according to Bloomberg. In its statement, Ramius said it learned Monday night that the Cypress board “had rejected its offer and that the company is pursuing an alternative transaction with a third party.”

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We took a long Columbus Day weekend here at Xconomy, but it didn’t shorten our roundup of life sciences news much. Here’s your latest update.

—Healthcare venture capital deals continue to climb back from their first-quarter plunge during the three months that ended September 30, according to the latest report from CB Insights, a New York firm that tracks investments in private companies. Venture firms invested $1.75 billion in 184 healthcare deals during the quarter, which sounds good, but it’s below the $1.9 billion that went into 192 healthcare companies during the same quarter of 2009.

—San Diego-based Synthetic Genomics and the nonprofit J. Craig Venter Institute are forming a new company called Synthetic Genomics Vaccines that will use the latest advances in synthetic biology and genomic sequencing to develop next-generation vaccines. The Venter Institute is contributing science and scientists, but no money.

—Albuquerque, NM-based Exagen Diagnostics is buying the San Diego-based diagnostics business of Cypress Bioscience (NASDAQ: CYPB) for as much as $8 million in upfront and milestone payments. Cypress also hopes to get additional future payments in the form of royalties on product sales.

—San Diego’s VentiRx, which also has operations in Seattle, said its lead drug candidate for nasal allergies helped to relieve common allergy symptoms in a clinical trial of 80 patients who were exposed to allergens in a scientifically controlled environment. The VentiRx drug is intended  to be the first once-weekly nasal spray for allergies.

—Luke found the geography of biotech has … Next Page »

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San Diego’s Cypress Bioscience (NASDAQ: CYPB), has agreed to sell its diagnostices business to Albuquerque, NM-based Exagen Diagnostics for as much as $8 million in upfront and milestone payments, with additional future payments in the form of royalties on product sales. Exagen Diagnostics, which specializes in the discovery and development of genomic marker tests, is acquiring Cypress Bio’s diagnostic business in its entirety, and will assume the lease for all lab operations in San Diego. The company said all of Cypress Bio’s lab employees will be offered positions with Exagen.

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An economic report shows federal funding for medical research has become a substantial factor in fueling the innovation economy in San Diego. And as if on cue, the National Cancer Institute issued a couple of grants here. We have the rest of your life sciences news in queue here:

—The board at San Diego’s Cypress Bioscience (NASDAQ: CYPB) unanimously rejected a slightly higher buyout offer from Ramius Value and Opportunity Advisors, a private equity firm in New York. In a nod to unhappy shareholders, though, Cypress said its board would conduct a broad evaluation of the biotech’s strategic alternatives to maximize shareholder value. The San Diego Union-Tribune’s Keith Darcé provided an in-depth look at the situation.

—Federal health sciences funding for research in San Diego increased by 38 percent over the first quarter of 2010, to $341 million during the quarter that ended June 30, according to the Connect Innovation Report. That was the highest level in more than two years. But the almost-40-page report shows that venture capital investing in San Diego continues to be anemic.

—Ophthonix, a vision correction technology company based in Vista, CA, raised $5.4 million toward a $12.1 million round of equity, rights and securities.

—The National Cancer Institute has renewed a grant for the Sanford-Burnham Medical Research Institute that will provide a total of $21 million through 2015. That’s a 21 percent increase over the cancer institute’s previous grant, according to the Sanford-Burnham.

—The National Cancer Institute also awarded $3 million to Advanced Targeting Systems, a privately held San Diego company that specializes in reagents for neuroscience researchers. ATS has developed a reagent called SP-PAP that targets chronic pain transmission, and the company plans to use the funding to initiate clinical trials for treating cancer pain.

—San Diego’s Amira Pharmaceuticals has filed an FDA application to begin clinical trials of a new drug for fibrotic disorders in the lungs. The company is seeking to run tests in healthy volunteers on AM152, an experimental blocker of a target called LPA1.

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[Updated 9/28/10 2:05 pm. See below.] There’s little surprise in the announcement today by San Diego’s Cypress Bioscience (NASDAQ: CYPB), which says its board of directors has “unanimously rejected” the slightly higher buyout offer that Ramius Value and Opportunity Advisors made two weeks ago. But Cypress is doing a far better job in explaining itself, especially in asserting the Ramius offer would be financed by Cypress assets to the detriment of shareholders.

The New York private equity fund, a subsidiary of the $7.8 billion Ramius fund group, appealed directly to Cypress shareholders on Sept. 15, when it increased its offer by 25 cents a share, to $4.25, in a Wall Street confrontation that began as an unsolicited buyout offer two months ago. Cypress, which says it considered the offer carefully with its financial and legal advisors, says today the Ramius offer “grossly undervalues” Cypress’ business prospects, and is “highly illusory.” Cypress recently shifted its business strategy to focus on drug development for central nervous system disorders.

In its statement this morning, the Cypress board says it is advising stockholders not to sell their shares to Ramius and to withdraw any previously tendered shares from Cypress. Addressing a point of concern among shareholders over the company’s change in strategy, the San Diego biotech says it’s planning “a broad evaluation of Cypress’ strategic alternatives” to maximize value for all Cypress shareholders.

Cypress also cited a number of specific objections its board has to the Ramius deal, including:

—The Ramius offer is designed to provide Ramius “an extremely attractive return… at the expense of all other Cypress stockholders.” Cypress, which has no debt, asserts that the buyout offer would be funded “almost entirely” by Cypress’ own cash and other assets, including the monetization of its royalty from its milnacipran drug for fibromyalgia, which is marketed as Savella. As a result, Cypress says Ramius would provide only about $17.8 million, or 51 cents a share, of its own money in the deal.

—By financing the buyout in this way, the Cypress board contends the Ramius deal transfers the value of Cypress from its shareholders to Ramius.

—Cypress says the Ramius offer is an opportunistic attempt to buy Cypress shares when they are trading at a 43 percent discount from the company’s 52-week high. The company also maintains the Ramius offer includes numerous conditions that make it “highly unlikely” the deal can close on Oct. 13, when the offer officially expires.

[Updated to reflect Ramius response.] A Ramius official said this afternoon the firm was studying the Cypress statement and was not prepared to comment at this time.

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The game is afoot for Ramius Value and Opportunity Advisors, the private equity group in New York pursuing San Diego’s Cypress Bioscience, as it made a direct appeal to Cypress shareholders to support its unsolicited buyout offer. At Xconomy, we’re issuing a direct appeal to get your life sciences news here.

—The stage has been set for a crucial review today of lorcaserin, the weight-loss drug that San Diego’s Arena Pharmaceuticals (NASDAQ: [[ticker:ARNA) has spent a dozen years and almost $1 billion developing. As Luke reported, Food and Drug Administration scientists reviewing Arena’s clinical trial data found “noteworthy” safety issues and said lorcaserin barely met the agency’s performance criteria. An independent FDA advisory panel is set to review locaserin data today.

—Ramius Value and Opportunity Advisors appealed directly to shareholders of San Diego’s Cypress Bioscience (NASDAQ: CYPB) yesterday when it raised its unsolicited buyout offer by 25 cents to $4.25 a share. That increased the private equity firm’s offer for all 38.6 million outstanding shares of Cypress to $164 million from almost $160 million. Cypress said it would review the increased offer and respond in 10 business days.

—Cambridge, MA-based Genzyme (NASDAQ: GENZ) says it is cutting 1,000 jobs from its estimated global workforce of roughly 12,000 people. Genzyme, which operates a diagnostics manufacturing and a gene therapy facilities in San Diego, says the cuts will happen over the next 15 months.

—San Diego-based CareFusion (NYSE: CFN) said it has formed a partnership with Blue Cross and Blue Shield of Illinois in a program to track infection rates in 23 hospitals, using a CareFusion data mining system called Med Mined. CareFusion says almost … Next Page »

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[Corrected 9/16/10, 2:00 pm. See below.] San Diego’s Cypress Bioscience (NASDAQ: CYPB), which has been stubbornly refusing to negotiate or even meet with a private equity firm over an unsolicited buyout offer, says it will review the fund’s increased offer “consistent with its fiduciary duties.”

Ramius Value and Opportunity Advisors, a subsidiary of the $7.8 billion Ramius fund group in New York, says in a statement today that it is taking its increased offer of $4.25 a share directly to Cypress shareholders, “given the board’s continuing refusal to negotiate with us.”

Cypress, which responded within hours in a statement, says, “stockholders are advised to take no action at this time pending the review of the tender offer by the Cypress Board of Directors.”

The activist investment fund, which holds about 10 percent of Cypress shares, initially offered to buy Cypress at $4 a share in July in an unsolicited bid that was valued at nearly $160 million for all outstanding shares. The sweetened offer would put the overall value of the deal at about $164 million for all outstanding shares (Ramius obviously would not acquire the shares it already owns).

[Corrects terms of milnacipran deal] Cypress spurned the Ramius offer in August, saying it “grossly undervalues Cypress’ current business and future prospects.” In an additional defiant move, Cypress also announced that it was withdrawing from its commercial business and “discontinuing” its rights to co-promote milnacipran (Savella), its drug for fibromyalgia (pain in the muscles, ligaments, and tendons) with Forest Laboratories. Forest is paying Cypress $2 million to “facilitate” the end of Cypress’ role, and Cypress says it is retaining its royalty on sales and other rights. As part of that move, Cypress laid off 123 people, or 86 percent of its workforce.

In a later announcement, Cypress said it had acquired a potential treatment for the core symptoms of autism from Bothell, WA-based Marina Biotech (NASDAQ: MRNA) and an electronic nicotine delivery device from Alexza Pharmaceutical (NASDAQ: ALXA) of Mountain View, CA, developed to help smokers quit smoking.

Since then, two other institutional investors have joined the brewing proxy battle by issuing open letters that were sharply critical of the biotech’s management and … Next Page »

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A second institutional shareholder has joined a potential proxy battle at Cypress Bioscience after the San Diego biotech spurned an unsolicited buyout offer from a New York hedge fund. The shareholder, Arcadia Capital Advisors of Great Neck, NY, which owns less than a 5 percent stake in Cypress, has issued an open letter that is sharply critical of both the management and board at Cypress.

“By failing to investigate the possibility of higher offers, the Board is not fulfilling its fiduciary duty to protect and enhance shareholder value,” Arcadia managing director Richard Rofé writes in the Sept. 7 letter addressed to Cypress shareholders. “Additionally, we question Management’s ability to successfully execute its announced strategy of building a portfolio of drug candidates.”

A spokeswoman for Cypress did not respond to a request for comment yesterday afternoon.

The letter clearly puts Arcadia in the same camp as Ramius Value and Opportunity Advisors, a subsidiary of the $7.8-billion Ramius fund group. The subsidiary owns a 10 percent stake in the San Diego biotech.

Cypress has rejected an unsolicited buyout offer of $160 million that Ramius made in July to buy all the Cypress shares it didn’t already own. The Cypress board has refused to meet or negotiate with Ramius, and Cypress management has made a dramatic change in the company’s core business strategy since Ramius tendered its offer, withdrawing from its existing commercial business (a fibromyalgia drug and specialized blood tests) to focus on developing drugs for central nervous system (CNS) disorders.

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The life sciences news over the past week was almost all about deals. Money came out of INC Research, a contract research organization in North Carolina that was founded in San Diego. Money went into Otonomy, Accumetrics, and some other San Diego startups. We round it all up for you here.

—San Diego-based Otonomy, a two-year-old startup developing new drug candidates for treating hearing and balance disorders of the ear, closed a $38.5 million Series B round of venture funding. Otonomy was started by San Diego’s Avalon Ventures, which converted $9 million in loans into equity as part of a $10 million Series A round investment just three months ago.

—The recent $575 million buyout of INC Research, a contract research organization based in Research Triangle Park, NC, was a happy outcome for investor (and Xconomist) Drew Senyei of San Diego’s Enterprise Partners Venture Capital, and neurologist Kenneth Selzer. It took a long time for the payday to arrive—INC Research was founded in San Diego 14 years ago.

—San Diego-based Avalon Ventures rounded up five other VC firms to acquire a compound called fenretinide, which was under development in Florida, for treating age-related macular degeneration. The six venture firms founded ReVision Therapeutics in San Diego just five months ago to resume development of fenretinide after Sirion Therapeutics of Tampa, FL, ran into some economic doldrums last year.

—A biomedical diagnostics company, San Diego-based Accumetrics, has raised $7 million as part of a Series E venture round that began with $16.5 million last October. Accumetrics, which makes an automated diagnostic instrument that measures the effectiveness of anti-clotting drugs, says now it should reach profitability.

—Cebix, a San Diego startup developing a supplemental treatment for complications that arise from type 1 diabetes, has raised $16 million over the past 14 months.

—San Diego-based Cypress Bioscience (NASDAQ: CYPB) said it acquired rights to two novel therapies in separate deals. Cypress acquired a potential treatment of the core symptoms of autism from Marina Biotech (NASDAQ: MRNA) of Bothell, WA. And Cypress licensed an electronic nicotine delivery technology from Alexza Pharmaceutical (NASDAQ: ALXA) of Mountain View, CA, that helps smokers quit smoking by enabling them to gradually step down how much nicotine they inhale.

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San Diego’s Cypress Bioscience (NASDAQ: CYPB), which is trying to keep an unsolicited buyout at bay while executing a dramatic change in its business strategy, says it has acquired rights to two novel therapies.

Earlier this month, Cypress rejected a $160-million buyout offer made in July by the New York-based Ramius Value and Opportunity Advisors—and has refused to meet or negotiate with the group. At roughly the same time, the San Diego biotech laid off 123 employees, or 86 percent of its workforce, in a strategic reorganization that includes withdrawing from its existing commercial business (a fibromyalgia drug and specialized blood tests) and focusing instead on drug development for central nervous system (CNS) disorders.

As part of its new strategy, Cypress is announcing two separate deals today:

—Cypress says it paid $750,000 upfront to acquire technology from Bothell, WA-based Marina Biotech (NASDAQ: MRNAD) for an intranasal formulation of carbetocin, a potential treatment for the core symptoms of autism, in a deal that could be worth as much as $27 million. Cypress says it will fund all continuing carbetocin development and pay “single-digit royalties” to Marina for any commercial sales. In the company’s statement, Cypress CEO Jay Kranzler says, “Given the number of autism cases in children, we believe that the addition of this novel therapy will enable us to address an important unmet medical need.”

—Cypress says it also paid $5 million to license an electronic nicotine delivery technology from Alexza Pharmaceutical (NASDAQ: ALXA) of Mountain View, CA, that helps smokers quit smoking by enabling them to inhale reduced doses of nicotine without smoking cigarettes. Cypress says it also agreed to pay Alexza an additional $1 million technology transfer payment once certain milestones have been met. Alexza also gets 10 percent (subject to certain circumstances) in the net proceeds of any sale or license of its nicotine delivery technology.

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Funding for San Diego life sciences startups can come in the form of small financing deals and as federal Small Business Innovation Research grants that can help to keep small biotechs alive. Allow me to aggregate all that and other life sciences news of the week for you.

—At a time when venture capital funding remains at low ebb, the National Cancer Institute plans to award a total of $110 million nationwide in Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) grants. Life Science entrepreneurs also can now get as much as $3 million over three years under the new Phase II Bridge Award program.

—I profiled San Diego-based Biocept, which is aiming its diagnostics technology at four of the most common types of solid tumors: prostate, breast, colorectal, and non-small cell lung cancers. Biocept CEO Stephen Coutts says the technology is sensitive enough to consistently capture and quantify extremely rare tumor cells that might comprise only one in 5-to-10 billion cells in a blood sample.

—Finistere Ventures, a San Diego venture capital firm that has maintained a low profile over the past five years, plans to raise another venture fund next year. Finistere invests mainly in early stage medical device and agricultural biotech startups.

—New York-based Ramius Value and Opportunity Advisors is still trying to meet with board members at San Diego’s Cypress Bioscience (NASDAQ: CYPB) to discuss the private equity firm’s $160 million buyout offer. Cypress has spurned Ramius so far.

—A sweep of San Diego’s “under-the-radar” deals in July by CB Insights yielded three life science financings, including Novalar Pharmaceuticals, the specialty dental pharmaceutical company that raised just over $1 million in debt, options to acquire securities, and other securities. CB Insights, a New York firm that tracks private companies, also turned up a $552,500 financing for Althea Technologies, a San Diego contract research organization, and $145,000 in debt for Chimeros, a San Diego biotech developing nano-scale cancer therapeutics.

—SG Biofuels of Encinitas, CA, and Life Technologies (NASDAQ: LIFE) of Carlsbad, CA, said they completely sequenced the genome of Jatropha curcas, a shrub that SG Biofuels is developing as a source for jet fuel. I was reminded after the story published that Synthetic Genomics said it already had sequenced the Jatropha Genome in May 2009.

—Procter & Gamble boosted San Diego-based Somaxon’s efforts to launch its new insomnia drug yesterday by saying it would help sell doxepin (Silenor) to thousands of U.S. doctors and pharmacies. The partners plan to begin marketing the drug next month.

—San Diego-based NeuroVigil’s founding chairman and CEO, Philip Low, was selected as a 2010 TR35 award recipient yesterday. The MIT magazine Technology Review cited Low for developing the iBrain, a small portable wireless device that monitors electrical brain activity through a single electrode instead of the mass of wires and pads usually needed for gathering such measurements.

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It took a week, but Ramius Value and Opportunity Advisors responded today to what it calls the “abrupt resignation” of independent director Jean-Pierre Millon from the board at San Diego’s Cypress Bioscience (NASDAQ: CYPB). The subsidiary of New York’s multi-billion-dollar Ramius group says it’s still committed to its $160-million buyout offer for Cypress, says it’s willing to negotiate, and asks the newly appointed lead independent director, Daniel Petree, for a meeting with any or all of San Diego biotech’s independent directors. In a letter to Petree, Ramius Partner Managing Director Jeffrey C. Smith says that Millon’s resignation “at best…demonstrates an unhealthy board environment,” and “at worst, it is symptomatic of a truly dysfunctional board that continues to act without regard to the best interests of shareholders.” Cypress has steadfastly rejected Ramius’ overtures.

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Whatever happened to the lazy “dog days of summer?” The past week was busy with life science news, with a lot of deals and other developments. Here’s our summary:

—Carlsbad, CA-based Life Technologies (NASDAQ: LIFE), in a bid to gain a competitive advantage in the market for fast and cheap gene sequencing, acquired Ion Torrent Streams of Guilford, CT, and South San Francisco, CA, for $375 million in cash and stock. Ion Torrent could get another $350 million in cash and stock if it can meet certain technical milestones through 2012. Game on!

—San Diego’s Cypress Bioscience (NASDAQ: CYPB) disclosed in a regulatory filing that one of its independent directors, Jean-Pierre Millon, has resigned. The director’s departure comes while Cypress Bio has been trying to hold off Ramius Value and Opportunity Advisors, which made an unsolicited $160 million buyout offer that Cypress has repeatedly rejected.

—Weston, MA-based Biogen Idec (NASDAQ: BIIB) landed a deal with Knopp Neurosciences to develop an experimental drug for amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease. Biogen, which has significant operations in San Diego, provided $20 million in an upfront payment to Pittsburgh-based Knopp, and purchased $60 million in Knopp stock. Knopp also could get another $265 million in Biogen payments tied to drug development goals.

—San Diego-based Allylix, which raised $9 million in venture funding in April, has launched its first terpene product—called nootkatone. It’s a flavor-fragrance that could be described as essence of grapefruit. As Allylix introduces new products to market, it’s gaining visibility as the latest of a new kind of startup that is using biotechnology to make “renewable chemicals” that take the “petro” out of petro-chemicals.

—I profiled San Diego’s Zogenix, which has raised $199 million since it was founded four years ago, and won FDA approval for its combined migraine drug and needle-free delivery system in mid-2009. Zogenix says its DosePro device is a faster and simpler method for subcutaneous injections than existing hypodermic needles and other devices.

—San Diego’s Prometheus Laboratories has amended the IPO registration it has had on file with government regulators since 2007. The specialty pharma and diagnostics company has not priced its shares, but is expected to raise somewhere between $100 million and $150 million.

—I talked with Ken Widder, the San Diego-based partner in San Francisco’s Latterell Venture Partners. He told me the firm doesn’t usually take management positions in the companies it helps create. But Widder said the partners have extensive operating experience and bring lots of practical talent to the startup boards they sit on. Widder, for example, has founded seven life science companies, holds 30 patents or patent filings, and has authored or co-authored 25 scientific papers.

—San Diego’s Reva Medical, which has been developing bioabsorbable medical stents, has filed for a $63 million IPO on the Australian Stock Exchange.

—San Diego’s Biocept, which has been adopting micro-fluidic technology to the field of cancer diagnostics, has raised $2.3 million of a planned $7.1 million round of equity funding.

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San Diego’s Cypress Bioscience (NASDAQ: CYPB), which is in a standoff with a Ramius Group fund over its buyout offer, disclosed in a regulatory filing today that one of its independent directors has resigned from its eight-member board.

The company, which yesterday reiterated its rejection of Ramius’ $160 million buyout offer, maintains that Jean-Pierre Millon “continues to support the Board of Directors and its decision to reject Ramius’ unsolicited, non-binding proposal” to acquire Cypress at $4 a share. Nevertheless, Roth Capital Partners analyst Scott Henry told The San Diego U-T “this is a a ‘no’ vote against what they are doing.”

It’s also telling that Cypress released a copy of its Aug. 17 rejection letter to Ramius in a news release yesterday, but did not issue a press release about Millon’s resignation today. The company only disclosed Millon’s resignation in today’s regulatory filing.

Cypress maintains in its filing that Millon also “has been and continues to be supportive of the Company’s current strategy to develop a portfolio of CNS drug candidates, and resigned from the Board of Directors due to a difference of opinion with respect to the timing of the execution of the strategy.”

A spokesman for New York-based Ramius Value and Opportunity Advisors declined to comment this evening.

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There wasn’t a lot of life science news over the past week, but what we had was pretty interesting. Judge for yourself.

—There’s a cat-and-mouse game underway between New York’s Ramius Value and Opportunity Advisors and San Diego’s Cypress Bioscience (NASDAQ: CYPB). Ramius, which offered $160 million to acquire Cypress last month, renewed its call yesterday for Cypress to meet to discuss its unsolicited buyout offer—and added a nearly $15 million incentive to sweeten the deal. Cypress, meanwhile, said it was “withdrawing from the commercial market” and laying off 86 percent of its workforce.

—The San Diego Entrepreneurs Exchange (SDEE), a fast-growing organization of rank-and-file biotech scientists and entrepreneurs, is working to develop a “virtual incubator” that can help get seed-stage biotech companies get started. Organizers said a lot of scientist who want to start their own companies need laboratory space to get the technical data they need to reach a “proof of concept” threshold needed to get funding—without having to buy capital equipment or sign a long-term lease for laboratory space

—Shares of San Diego-based CareFusion (NYSE: CFN) gained almost 9 percent, or $1.86 per share yesterday, after the medical equipment maker said it’s laying off 700 employees, or 5 percent, of its workforce. That includes 180 of CareFusion’s 2,000 San Diego-based employees.

—Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which maintains a substantial presence in San Diego, said its lead drug candidate for treating hepatitis C infections has passed another late-stage trial. In the supplemental test, the drug wiped out the virus that causes hepatitis C in 92 percent of the patients after 24 weeks.

—Lisa Suennen, who is a Northern California co-founder of New York venture firm Psilos Group Managers, told Ryan she regularly comes to San Diego to attend … Next Page »

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Here’s one solution to a suitor’s unsolicited buyout offer: Make yourself ugly, at least to that suitor.

San Diego’s Cypress Bioscience (NASDAQ: CYPB) got a $160 million cash buyout offer last month from Ramius Value and Opportunity Advisors, part of the New York-based, $7.8-billion Ramius hedge fund group.

Ramius, which had accumulated a 10 percent ownership stake in Cypress, made its offer on July 19. The San Diego biotech had little to say at the time, except that its board was reviewing the matter.

Cypress responded this week with two announcements. In the first, Cypress says it is withdrawing from its commercial business, including a deal with Forest Laboratories  to sell milnacipran, its fibromyalgia drug marketed as Savella. Forest agreed to pay Cypress $2 million to discontinue its role in promoting milnacipran, although Cypress says it retained royalty and other rights. As part of the move, Cypress says it also is laying off 123 people, or 86 percent of its workforce. In the statement, Cypress CEO Jay Kranzler says the biotech has been contemplating its “withdrawal from the commercial market” for some time as part of the company’s “renewed strategic focus on CNS drug development.”

In a second statement yesterday, Cypress says its board has unanimously rejected the buyout. Cypress says Ramius’ offer to buy all the stock it doesn’t already own at $4 a share “grossly undervalues Cypress’ current business and future prospects and consequently is not in the best interests of Cypress’ other stockholders.”

It’s worth noting that in its statement, Cypress already has recast itself as “a pharmaceutical company engaged in the development of innovative drugs to treat central nervous … Next Page »

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San Diego’s life sciences companies continued to raise big money, which is a good thing, since a survey shows that venture funding for biotech and medical device companies accounted for more than 80 of all second-quarter VC deals in San Diego. We’ve rounded up all that and more for you here:

—San Diego’s Cypress Bioscience (NASDAQ: CYPB) said its board will review an unsolicited buyout offer with its financial and legal advisers, and advised the company’s shareholders to “take no action at this time.” New York-based Ramius, a $7.8-billion hedge fund group, owns almost 10 percent of Cypress and offered $4 a share, or about $160 million, to acquire the rest.

—San Diego-based Trius Therapeutics is back on track after it was forced to postpone its planned IPO earlier this year to accommodate new FDA guidelines for a late-stage trial of its antibiotic. The company’s initial stock offering is expected next week.

—An expert panel that advises the FDA voted 10-6 against approving an obesity drug developed by Mountain View, CA-based Vivus (NASDAQ: VVUS), saying the negative effects outweighed the weight-loss benefits. After the ruling, shares of San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) climbed toward its 52-week high of $5.93 a share, but San Diego-based Orexigen Therapeutics (NASDAQ: OREX) continued to trade around $4 a share. Both San Diego biotechs are developing obesity drugs of their own.

—Alzheimer’s drug developer Sonexa Therapeutics ranked as San Diego’s No. 1 venture deal during the second quarter, when the biotech raised $37.23 million. The MoneyTree survey showed that venture firms invested $170.6 million in 24 local companies during the quarter—with more than 80 percent of the capital going to life sciences deals.

—San Diego-based Zogenix, a four-year-old startup developing drugs for treating neuroscience disorders and pain, said last week it raised $50 million in an undesignated round that includes a $15 million venture investment from its existing investors and $35 million in debt financing led by Oxford Finance and Silicon Valley Bank. The returning venture investors are Clarus Ventures, Domain Associates, Scale Venture Partners, Thomas, McNerney & Partners, Abingworth Management, and Chicago Growth Partners.

—San Diego authorities have charged a 59-year-old man, Kent Thomas Keigwin, with murder in connection with the death of John G. Watson, a retired biotech executive and angel investor who was found dead in his La Jolla home on June 8. Prosecutors said Keigwin also was charged with identity theft, grand theft of personal property, burglary, and forgery of documents in connection with $7.5 million that was unlawfully transferred from Watson’s brokerage account.

—Auspex Pharmaceuticals of Vista, CA, has raised an additional $12 million from investors to continue development of deuterium-based analogs of clinically validated drugs in multiple therapeutic areas. The biotech raised almost $13.9 million in a previous round from Thomas, McNerney & Partners, CMEA Ventures, and Costa Verde Capital.

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An activist investment fund managed by Ramius, a New York multi-fund hedge fund, pounced on Cypress Bioscience (NASDAQ: CYPB) today, offering to pay almost $160 million in cash to acquire the San Diego biotech. Ramius Value and Opportunity Advisors, a subsidiary of the $7.8-billion Ramius fund group, already owns about 9.9 percent of Cypress, making it one of the company’s largest shareholders.

Shares of Cypress, which closed at $2.50 on Friday, soared this morning by more than 80 cents a share, a gain of more than 30 percent, after Ramius revealed its offer, which includes a letter to the Cypress board that was critical of the biotech’s “significant destruction of shareholder value.” Ramius says its $4-per-share offer represents a 60 percent premium over Friday’s close and a 74 percent premium since Cypress acquired BioLineRx’s BL-1020 drug candidate.

Cypress did not immediately respond to a request for comment. The San Diego biotech has about 37.4 million shares outstanding, and additional, unvested options that also would be part of Ramius’ offer to acquire all shares it doesn’t already own.

The company specializes in developing drugs for unmet medical needs in pain management, physical medicine, and rehabilitation, including such challenging disorders as fibromyalgia and rheumatoid arthritis. Cypress also provides personalized medicine services, including a test that aids in the diagnosis and progress of rheumatoid arthritis.

In the letter sent to Cypress, Ramius partner and managing director Jeffrey C. Smith, makes several specific points:

—Ramius expects the Cypress board to immediately hire a reputable investment bank to evaluate its offer and to formally explore selling the company.

—Ramius is prepared to enter into immediate discussions with the board to structure a transaction that maximizes value for all shareholders

—Ramius says it its willing to consider a structure that would allow Cypress to continue the development of the recently acquired BL-1020 drug candidate, if management can fund the required financing for the Phase IIb trial themselves or from a third party financing source.

—Ramius demands that the Cypress board “cease and desist” from approving any additional acquisitions given the company’s “poor judgment” in making previous, “highly speculative” deals.

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