An investigation on behalf of current investors of Cypress Bioscience, Inc. (NASDAQ:CYPB) over possible shareholder claims based on breach of fiduciary duty in connection with the going private offer by Ramius LLC was announced.

On Monday, July 19, 2010, San Diego based Cypress Bioscience, Inc. (Nasdaq: CYPB) confirmed that it has received an unsolicited proposal from Ramius LLC to acquire Cypress Bioscience for $4.00 per share in cash. On August 05, 2010, Cypress Bioscience announced that its Board of Directors has unanimously concluded that the proposal by Ramius LLC grossly undervalues Cypress current business and future prospects and consequently is not in the best interests of Cypress other stockholders. Then on August 13, 2010, Ramius Value and Opportunity Advisors LLC, a subsidiary of Ramius LLC, announced that it delivered a letter to the Board of Directors of Cypress Bioscience, Inc. . In the letter, Ramius Value and Opportunity Advisors LLC reiterated its offer to acquire Cypress Bioscience for $4.00 per share in cash plus a potential 50% interest in BL-1020 for total implied consideration of $4.39 per share. Ramius Value and Opportunity Advisors LLC said it is willing to consider raising the value of its acquisition proposal in the event that it is granted limited due diligence and Cypress Bioscience agrees to negotiate in good faith around consummating a transaction. Ramius LLC already owns approximately 9.9% of Cypress Bioscience' outstanding common stock.

Shares of Cypress Bioscience, Inc. (CYPB) traded at $2.65 per share before the news and jumped to $3.81 per share after the announcement.

But CYPB stock traded above the initial offer as recent as Jun 18, 2010, and at over $5 per share since the beginning of the year. CYPB shares traded at almost $10 in 2009, at over $17 per share in 2007, and at least one analyst has set a price target of $10.00 per share for Cypress stock. Cypress Bioscience, Inc. increased its Total Revenue from $13.44million in 2007, to $16.66million in 2008, and to $27.33million in 2009.

The investigation by a law firm concerns whether Ramius LLC breached their fiduciary duties by not acting in Cypress Bioscience, Inc. (NASDAQ:CYPB) shareholders' best interests, weather the Cypress Bioscience, Inc. Board of Directors breaches their fiduciary duty to Cypress Bioscience (NASDAQ:CYPB) stockholders by failing to adequately shop or negotiate for the Company prior to entering into the agreement, or whether Ramius LLC will be underpaying for Cypress Bioscience, Inc. (CYPB), thus unlawfully harming CYPB stockholders.