Cypress Bioscience is committed to developing and commercializing pharmaceutical products and personalized medicine laboratory services that allow physicians to serve unmet medical needs. We are developing milnacipran for fibromyalgia (FM) and with our recent acquisition of Proprius Pharmaceuticals, we have expanded our strategy to include providing personalized medicine laboratory services to rheumatologists. Personalized medicine laboratory services are laboratory-developed tests which are validated analytically and clinically to provide physicians with actionable information to help manage their patients’ care, including predicting the likelihood of developing disease or optimizing therapy. We also intend to build a sales force to launch the personalized medicine laboratory services. We have exercised the right granted by our partner, Forest Laboratories, Inc., or Forest Laboratories, to co-promote our leading product for FM, milnacipran, and intend to detail it to rheumatologists, pain centers, and physical and rehabilitation medicine specialists.  Offering integrated diagnostic and therapeutic services through the same sales organization could facilitate physician access and improve the quality of the sales call, as well as help establish Cypress as a leader targeting these specific specialists. We also have a number of Proof of Concept (POC) stage opportunities in development, including two pharmaceutical candidates acquired from Proprius, and intend to pursue these opportunities on an ongoing basis. We continue to evaluate various other potential strategic transactions, including the acquisition of products, product candidates, technologies and companies, and other alternatives.

One of our goals is to be one of the leading companies to commercialize a product approved in the United States for the treatment of FM. Milnacipran has been approved for a non-pain condition in over 50 countries, with commercial experience outside the U.S. since 1997. We obtained an exclusive license for milnacipran from Pierre Fabre Medicament, or Pierre Fabre, in 2001.

In December 2002, we completed a Phase II trial evaluating milnacipran for the treatment of FM. In our Phase II trial, milnacipran was shown to improve pain and fatigue symptoms among patients with FM.

In January 2004, we entered into a collaboration agreement with Forest Laboratories, a leading marketer of central nervous system, or CNS, drugs with a strong franchise in the primary care and psychiatric markets. As part of this collaboration with Forest Laboratories, we sublicensed our rights to milnacipran to Forest Laboratories for the United States, with an option to extend the territory to include Canada, which was exercised in July 2007.

In September 2005, we announced the top-line results from the first Phase III trial with milnacipran, an 888 patient randomized, six month, double-blind, placebo-controlled pivotal study. Although our pre-specified primary endpoint did not achieve statistical significance at the p<0.05 level, we believed that the preliminary results supported continuation of the development program.

In May 2007, we announced top-line results from our second Phase III trial for milnacipran, which was a 1,196 patient randomized, three month, double-blind, placebo-controlled pivotal Phase III study. The results demonstrated statistically significant therapeutic effects of milnacipran as a treatment for FM. See Products for more detailed information on these trial results.

In December 2007, Cypress and Forest announced that we had submitted the milnacipran New Drug Application (NDA) to the FDA. In February 2008, the FDA accepted for review the NDA for milnacipran for the treatment of FM. With a standard 10-month review timeline, the FDA Prescription Drug User Fee Act (PDUFA) target action date is the end of October 2008.

Additional information on our ongoing clinical development program for milnacipran can be found at www.clinicaltrials.gov.

In March 2008, we announced the closing of the acquisition of Proprius that included an upfront payment of approximately $37.5 million in cash, as well as an additional $37.5 million in potential milestone related payments associated with the development of Proprius’ early clinical-stage therapeutic candidates, which include a product to treat pain and a product to treat rheumatoid arthritis.