Shares of Cypress Bioscience Inc. (NASDAQ:CYPB) gained $7.92, or 93.7 percent, Wednesday to close at a 52-week high of $16.37 after the company announced positive top-line data from its second Phase III trial of milnacipran in fibromyalgia.

Brian Lian, analyst with CIBC World Markets Corp., called it a "positive surprise" that milnacipran achieved statistical significance at both doses tested, against both primary endpoints.

Cypress' first Phase III trial of milnacipran did not fare as well. Its failure to achieve statistical significance - a close shave in some analyses - cut the San Diego-based company's share price in half. Yet Cypress and partner Forest Laboratories Inc. decided to push forward with the second Phase III trial, which already was under way. (See BioWorld Today, Sept. 30, 2005.)

Both Phase III trials were randomized, double-blind, placebo-controlled studies comparing 100 mg or 200 mg of milnacipran daily with placebo. Both trials used similar composite primary endpoints designed to evaluate the treatment of pain associated fibromyalgia as well as the treatment of fibromyalgia syndrome.

But Cypress and Forest made a few key changes to the second trial. They increased the number of patients from 888 to 1,196; they decreased the evaluation period from six months to three months; and they included Baseline Observation Carry-forward (BOCF) as a pre-defined analysis, rather than just Last Observation Carry-forward (LOCF).

According to Lian, they also required investigators to spend more time counseling patients during the initial titration of the drug, advising them that the initial nausea would pass, which "seemed to help them lower dropouts."

The efforts paid off.

Milnacipran improved the treatment of pain associated with fibromyalgia at the 200 mg dose (p=0.004) and at the 100 mg dose (p=0.025) using the BOCF analysis. Pain response was defined as a "much" or "very much" improved self-assessment using the Patient Experience Diary (PED) and a 30 percent or greater reduction in pain as measured by a visual analog scale (VAS) using the Patient Global Impression of Change (PGIC).

Additionally, milnacipran improved fibromyalgia syndrome at the 200 mg dose (p=0.015) and at the 100 mg dose (p=0.011) using the BOCF analysis, although results also were statistically significant using the LOCF method. Responders were defined as those who achieved the pain response criteria and also demonstrated an improvement in physical function as assessed by the SF-36 Physical Component Summary.

During a conference call, Cypress Chairman and CEO Jay Kranzler declined to provide much detail about the data, citing limited information available as well as competitive reasons. When pressed about the magnitude of the response rates observed, he pointed to the "clinically meaningful threshold" inherent in the composite responder analysis, but refused to reveal more, adding that Cypress has "frankly been more forthcoming" than its top two competitors regarding data and has suffered because of it.

Although no drugs are approved specifically to treat fibromyalgia, Lian expects milnacipran to face competition primarily from Pfizer Inc.'s Lyrica (pregabalin) and Eli Lilly and Co.'s Cymbalta (duloxetine). Both companies are eyeing label expansions into the fibromyalgia space, with Lyrica already under FDA review. Other competition may come from Wyeth Pharmaceuticals Inc.'s Pristiq (desvenlafaxine succinate) and Jazz Pharmaceuticals Inc.'s JZP-6 (liquid Xyrem).

Yet Cypress' positive data in both pain associated with fibromyalgia and fibromyalgia syndrome may lead to a broader label. "I think from a practical standpoint, patient acceptance is going to be driven by more than just a reduction in pain," Kranzler said.

Lian projected that milnacipran could achieve sales of approximately $507 million by 2010. Megan Murphy, analyst with Lazard Capital Markets, projected peak sales of $582 million in 2012. Both analysts noted the potential for off-label sales in depression or broader pain indications such as lower-back pain.

Cypress and Forest plan to file their new drug application by the end of 2007, despite the fact that data from a third Phase III trial are expected in the first half of 2008, as are data from a European trial conducted by Pierre Fabre Medicament SA, a division of Paris-based bioMerieux Pierre Fabre, from which Cypress licensed rights to the drug. Milnacipran has been marketed outside the U.S. for depression since 1997, but Cypress hold use patents in fibromyalgia through 2021.

With the achievement of positive Phase III data, Cypress expects to receive reimbursement of certain clinical trial costs as well as its first milestone payment from Forest under the companies' potential $250 million partnership. Cypress retained the option to co-promote the drug, which Kranzler said the company "will consider" in the months ahead. (See BioWorld Today, Jan. 12, 2004.)

Lian predicted that a takeover by Forest may be in the cards, given the remaining milestones and future royalties due. Kranzler denied that any such discussions are under way, stating that Cypress will "begin to shift some focus to expanding the portfolio beyond milnacipran," which is the company's only product.

Cypress had slightly more than $100 million in cash, equivalents and short-term investments as of March 31 and a burn rate of about $8 million per year.