Cypress Bioscience up on Cymbalta approval

Shares of Cypress Bioscience Inc. surged Monday, as analysts said the Food and Drug Administration's approval of Eli Lilly & Co.'s antidepressant Cymbalta as a treatment for fibromyalgia bodes well for a similar Cypress drug.

Shares of San Diego-based Cypress rose 65 cents, or 8.6 percent, to $8.21 in afternoon trading.

Earlier Monday, Lilly said the FDA agreed to expand the use of the company's fastest-growing drug, Cymbalta, to include the chronic pain disorder fibromyalgia. The drug already is approved for diabetic nerve pain, major depressive disorder and generalized anxiety disorder.

Fibromyalgia affects about 5 million Americans. Researchers believe its cause may be related to genetics, stress and changes in brain and spinal cord chemistry and that it leads to increased pain sensitivity.

Jefferies & Co. analyst Adam Walsh said Cymbalta's approval bodes well for Cypress' chance to get its drug milnacipran approved, given that both drugs are in the same class and have similar safety profiles.

The FDA is due to make a decision on milnacipran in Octover, and right now, Wall Street is expecting a six- to nine-month delay pending possible agency review of the drug's third late-stage trial and blood pressure study. But after Cymbalta's approval, Walsh thinks chances remain good for "first-pass" approval in October.

Walsh backed a "Buy" rating and $30 price target on the stock, saying that if milnacipran can capture just 1/6th of the nation's fibromyalgia patients, sales could climb above $1 billion.

Friedman, Billings, Ramsey analyst David Amsellem said that while elevations in blood pressure and heart rate generally are higher for patients taking milnacipran than Cymbalta, the differences aren't meaningful and haven't resulted in adverse clinical consequences in trials or in the decade the drug has been on the market in Europe.

Amsellem maintained his "Outperform" rating and $22 price target, saying the possibility of a major delay is limited and the possibility of an on-time approval is strong.