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.