SAN DIEGO, CA, Jun 20 (MARKET WIRE) —
Cypress Bioscience, Inc. (NASDAQ: CYPB) announced that Cypress has
entered into an exclusive North American license for the development and
commercialization of BioLineRx’s novel antipsychotic (BL-1020, hereafter,
CYP-1020), a potential breakthrough treatment for schizophrenia. Specific
terms of the transaction were not disclosed, but the total upfront
payment to BioLineRx was $30 million, with total potential clinical and
regulatory milestones of up to $160 million through to approval in the
United States (the majority of which are related to improvement in
cognition), potential commercial milestones of $85 million, and a
potential additional $90 million associated with approval for additional
indications in the United States or for approval in other countries in
North America. In addition, Cypress will fund all continuing development
activities and pay BioLineRx a royalty based on applicable sales.

“This agreement reflects our renewed strategic focus on R&D, where we
have successfully demonstrated leadership, creativity and a competitive
advantage,” said Jay D Kranzler, MD, PhD, Chairman and Chief Executive
Officer of Cypress Bioscience. “This transaction represents a step down a
path that we have successfully navigated before — late stage, innovative
drug development of a novel compound to address a significant unmet
medical need. From fibromyalgia, and our success with Savella(R), we
believe Cypress has the experience and expertise required to successfully
continue the development of CYP-1020, a novel antipsychotic that has the
potential to address both the psychotic symptoms and cognitive deficits
associated with schizophrenia. CYP-1020′s data to date is compelling and
we believe that it has the potential to set a new standard in the field
as a first-line antipsychotic.”

“This licensing agreement is a reflection of BioLineRx’s proven business
model, which focuses on conducting high-quality proof of concept programs
with novel compounds and then partnering with companies which have the
clinical and commercial expertise to help fully realize their potential.
We believe that CYP-1020 is especially exciting, insofar as the cognitive
impairments associated with schizophrenia reflect such a dramatic unmet
medical need,” said Kinneret Savitsky, PhD, Chief Executive Officer of
BioLineRx.

Carol Tamminga MD, Professor of Psychiatry at the University of Texas
Southwestern, a specialist in schizophrenia and translational
neuroscience, and a BioLineRx consultant, said, “Patients with
schizophrenia demonstrate symptoms in several functional domains,
including psychosis and cognitive impairment. While antipsychotic
therapies improve psychosis, there are no medications that affect
cognition. CYP-1020 is a new antipsychotic drug candidate designed to
reduce psychosis and augment cognition. Importantly, a recent proof of
concept trial showed that CYP-1020 not only reduced psychosis compared to
placebo, but it also improved cognition as compared to both placebo and
an active control. This is a remarkable finding and will generate
enormous enthusiasm in the field, if it can be replicated and its
implications for psychosocial function demonstrated.”

As a result of funds received from the Office of Chief Scientist of the
Ministry of Industry, Trade and Labor of the State of Israel, or the OCS,
in respect to BioLineRx’s preclinical and clinical program related to
CYP-1020, the effectiveness of the license agreement is subject to the
consent of the OCS and OCS may condition providing its consent on the
parties’ agreeing to modifications in the license agreement. Cypress and
BioLineRx have agreed to work together to attempt to secure OCS approval
on terms that minimize financial and non-financial obligations on the
parties that may be imposed as a condition to receipt of the OCS consent.
Cypress is not required to agree to any modifications to the license
agreement that would have, or would be likely to have, a material adverse
impact on its rights and obligations under the license agreement, and
whether OCS provides its consent on terms acceptable to Cypress, and the
timing of any such consent, cannot be estimated at this time. BioLineRx
has agreed that it will assume sole responsibility for any financial
obligations imposed by the OCS. In addition, the upfront payment was
placed into an escrow account pending receipt of a satisfactory OCS
consent and effectiveness of the license agreement.

CYP-1020 Phase 2b Trial Design

BioLineRx designed and conducted a six week, double blind, placebo and
active-comparator (risperidone) controlled multisite phase 2b clinical
trial. The phase 2b EAGLE (Effective Antipsychosis via GABA Level
Enhancement) study was conducted under a U.S. Food and Drug
Administration Investigational New Drug Application (IND) at 40 sites in
the U.S., Europe and India and included patients suffering from acute
exacerbation of schizophrenia. In this six week study, 363 patients were
randomized equally to treatment with low (10 mg/day) or high
(20-30mg/day) dose of CYP-1020, risperidone (2-8mg/day) or placebo.

The study was designed to demonstrate statistically significant
superiority of CYP-1020 to placebo on the primary efficacy measure, the
change from baseline in the total score of the Positive and Negative
Symptoms of Schizophrenia (PANSS). Risperidone at a dose of 2-8 mg was
included as a positive control to validate the trial results.

Cognitive function in the EAGLE trial was measured by the Brief
Assessment of Cognition in Schizophrenia (BACS) neuropsychological
battery. The BACS test battery assesses a variety of aspects of
cognition, including: verbal memory, working memory, motor speed, verbal
fluency, attention and speed of information processing, and executive
functioning. All of these functions are significantly impaired in
patients with schizophrenia(1).

CYP-1020 Phase 2b Data

Results of the phase 2b EAGLE study demonstrated that CYP-1020 at the
20-30mg dose range exhibited clinically relevant and statistically
significant improvement on the cognition endpoint assessed using the BACS
neuropsychological test battery. The 20-30mg dose range of CYP-1020 was
superior to both risperidone and placebo at endpoint on the BACS total
score (p=0.027 for both), with positive trends in all subsets within the
BACS.

CYP-1020 was also effective as a treatment for the other symptoms of
acute schizophrenia exacerbation, as measured by the Positive and
Negative Symptom Scale (PANSS). The CYP-1020 high dose group
(20-30mg/day) experienced a statistically significant reduction in the
PANSS from baseline versus placebo (LS mean -23.6 vs. -14.4; p=0.002).
The superiority of CYP-1020 (20-30mg/day) over placebo was also supported
by additional secondary efficacy measures such as the clinical global
impression of severity (CGI-S) and change (CGI-C).

The incidence of serious adverse events was low in the CYP-1020
(20-30mg/day) group (0%) compared to risperidone (3.3%) and placebo
(6.5%). Discontinuations due to adverse events (AEs) were similar in the
CYP-1020 (20-30mg/day) group and in the placebo group (4.3%) but higher
in the risperidone group (8.8%). There were no statistically significant
or clinically relevant metabolic related AEs including body weight gain,
glucose increases, or changes in lipids. The incidence of cardiovascular,
sexual, psychiatric, autonomic and gastrointestinal AEs was low and did
not increase compared to placebo. There were no statistically significant
or clinically relevant changes in subject electrocardiography (ECG),
laboratory or vital signs (blood pressure, heart rate, temperature).

Recent results from an extension trial showed that patients receiving
CYP-1020 (20-30mg/day) for six additional weeks maintained the
improvements on the PANSS and CGI that had been observed after the
initial six weeks of treatment and, more importantly, showed continuing
improvement in cognitive function as assessed by the BACS. The 12 weeks
of treatment were not associated with any increased toxicities.

About CYP-1020

CYP-1020 (formerly BL-1020) is a first-in-class GABA-enhanced
antipsychotic that combines dopamine antagonism with GABAergic activity.
CYP-1020′s dopamine antagonism reflects a well-established pathway to
improve the psychotic symptoms of schizophrenia. Furthermore, both
preclinical and clinical data suggest that CYP-1020′s GABA enhancement
may provide the basis for improved cognition

About Schizophrenia

Schizophrenia is a severe mental disorder affecting about one percent of
the world’s population. It is characterized by profound disruptions in
thinking, affecting language, perception, and the sense of self(2).
According to World Health Organization (WHO) estimates, schizophrenia
affects approximately 24 million people worldwide. The symptoms of
schizophrenia fall into three broad categories: positive symptoms,
negative symptoms, and cognitive symptoms. Positive symptoms are
psychotic behaviors not seen in healthy people, such as hallucinations
and delusions. Negative symptoms are associated with disruption to normal
behavior and emotion, such as a lack of ability to sustain planned
activity or a lack of pleasure in everyday life. Cognitive symptoms
include poor “executive functioning” (the ability to understand
information and use it to make decisions), trouble focusing or paying
attention, and problems with “working memory” (the ability to use
information immediately after learning it)(3).

Cognitive dysfunction is a core deficit among patients with
schizophrenia, and is reflected in their difficulty with memory,
attention, and problem solving. Its impact upon individuals suffering
from schizophrenia is profound and frequently results in disabilities in
social, occupational, or daily functioning, including the frequent
inability to maintain employment. Currently available antipsychotics have
shown little to no ability to improve cognition and there are currently
no marketed products available to treat the cognitive symptoms of the
disease.

Financial Information
Per Cypress’ un-audited financials, it ended the
first quarter of 2010 with approximately $137 million in cash — the
upfront payment of $30 million will be paid from that amount.

Conference Call Information

Cypress Bioscience will hold a conference call at 10AM EST on Monday,
June 21st. Dr. Jay Kranzler, CEO and Chairman of the Board of Directors
and Sabrina Johnson, Executive Vice President, COO and CFO of Cypress
Bioscience, will participate in the call, as will Dr. Richard Keefe,
Professor of Psychiatry and Behavioral Sciences at Duke University
Medical Center.

Date: Monday June 21, 2010
Time: 10AM EST
Conference call numbers:
Toll free: (866) 814-1916
International: (703) 639-1360
Audio Webcast:

http://wcc.webeventservices.com/r.htm?e=222569&s=1&k=F226AEC9EE93B609172A22207B0

F480&cb=blank&tile=false

A replay of the conference call will be available for five days and
can be accessed by dialing (888) 266-2081or (703) 925-2533 Access code:
1465408.

About BioLineRx

BioLineRx Ltd. is a publicly-traded (TASE: BLRX) biopharmaceutical
development company based in Jerusalem, Israel with US offices in
Rockville, Maryland. BioLineRx is dedicated to identifying, in-licensing
and developing therapeutic candidates for unmet medical needs or that
have advantages over currently available therapies. BioLineRx’s current
development pipeline consists of three clinical stage candidates as well
as seven candidates in various pre-clinical development stages spanning a
variety of indications including central nervous system diseases,
oncology, cardiovascular and autoimmune diseases. One of BioLineRx’s lead
compounds, BL-1040, has recently been out-licensed to Ikaria Holdings
Inc. for a total deal value of $282.5 million. For more information about
BioLineRx, please visit www.biolinerx.com.

About Cypress Bioscience

Cypress Bioscience, Inc develops and commercializes therapeutics and
personalized medicine services to facilitate improved and individualized
patient care. Cypress’ goal is to address the evolving needs of
specialist physicians and their patients by identifying unmet medical
needs in the areas of pain, rheumatology, and central nervous system
disorders, including challenging disorders such as fibromyalgia,
rheumatoid arthritis, lupus and, with the license agreement with
BioLineRx, schizophrenia. Current marketed products include Savella(R)
(milnacipran HCI) and the Avise PG(SM) and Avise MCV(SM) therapeutic
monitoring, diagnostic and prognostic testing services for rheumatoid
arthritis. Development stage products include, with the license agreement
with BioLineRx, CYP-1020 for schizophrenia, as well as AVISE-SLE(SM), a
lupus diagnostic testing service.

For more information about Cypress, please visit www.cypressbio.com.

Forward-Looking Statements
This press release, as well as Cypress’ SEC
filings and website at http://www.cypressbio.com, contain forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements include statements with respect to the
effectiveness of the license agreement, the parties’ receiving consent
from the OCS to the license agreement and the terms and timing of that
consent, CYP-1020 and its potential to treat the psychotic symptoms and
cognitive deficits associated with schizophrenia and become a new
standard as a first-line antipsychotic, Cypress’s ability to successfully
develop and commercialize CYP-1020, and the ability of Cypress to achieve
regulatory, commercial and other milestones under the license agreement
and to sell products that cause royalties to be payable under the license
agreement. Actual results could vary materially from those described as a
result of a number of factors, including the risk that the OCS may not
consent to the license agreement on terms and with timing that are
acceptable to Cypress, which could cause the license agreement to not
become effective, and risks involved with the high uncertainty that
characterizes research and development activities in general,
particularly those of drug development, including the risks that CYP-1020
may not demonstrate adequate safety and/or efficacy in later clinical
trials to continue with its development, may not have adequate
intellectual property right protection to support its continued
development in the Cypress territory, may be unable to obtain FDA or
similar regulatory approval as a drug candidate for any of many reasons
relating to the regulatory approval process, or may address a commercial
market that is smaller than currently anticipated by Cypress and that
does not support its continued development, or that Cypress may otherwise
fail to successfully develop and commercialize CYP-1020 in its territory,
and other risks and uncertainties described in Cypress’ most recent
Annual Report on Form 10-K, most recent Quarterly Report on Form 10-Q and
any subsequent SEC filings. You are urged to consider statements that
include the words “may,” “will,” “would,” “could,” “should,” “believes,”
“potential,” “expects,” “plans,” “anticipates,” “intends,” or the
negative of those words or other comparable words to be uncertain and
forward-looking.
The statements in this press release speak only as the
date hereof, and neither Cypress nor BioLineRx undertakes any obligation
to publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise.

(1) Keefe et al. (2004). The Brief Assessment of Cognition in
Schizophrenia: reliability, sensitivity, and comparison to standard
neuropsychological battery. Schizophrenia Research, 68, 283-297.

(2) Schizophrenia, World Health Organisation,

http://www.who.int/topics/schizophrenia/en/

(3) What are the symptoms of schizophrenia? National Institute of Mental
Health,

http://www.nimh.nih.gov/health/publications/schizophrenia/what-are-the-symptoms-

f-schizophrenia.shtml

INVESTOR RELATIONS CONTACTS:

Mary Gieson
Investor Relations
Cypress Bioscience, Inc.
(858) 452-2323
mgieson@cypressbio.com

MEDIA CONTACT:

Kathy Nugent
Burns McClellan
(212) 213-0006
knugent@burnsmc.com

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