SC 13D/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 2)1

Cypress Bioscience, Inc.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

232674507

(CUSIP Number)

JEFFREY C. SMITH

RAMIUS LLC

599 Lexington Avenue, 20th Floor

New York, New York 10022

(212) 845-7955

STEVE WOLOSKY, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

August 5, 2010

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS VALUE AND OPPORTUNITY MASTER FUND LTD
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,067,500
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,067,500
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,067,500
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0%
14	TYPE OF REPORTING PERSON CO

2

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS OPTIMUM INVESTMENTS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 134,951
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 134,951
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 134,951
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON OO

3

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS NAVIGATION MASTER FUND LTD
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,549
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,549
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,549
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON CO

4

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON COWEN OVERSEAS INVESTMENT LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 610,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 610,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 610,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.6%
14	TYPE OF REPORTING PERSON CO

5

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS ENTERPRISE MASTER FUND LTD
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,549
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,549
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,549
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON CO

6

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS ADVISORS, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 747,500
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 747,500
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 747,500
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.9%
14	TYPE OF REPORTING PERSON OO

7

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS VALUE AND OPPORTUNITY ADVISORS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,067,500
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,067,500
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,067,500
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0%
14	TYPE OF REPORTING PERSON OO

8

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RAMIUS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,815,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,815,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON OO

9

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON COWEN GROUP, INC.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,815,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,815,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON CO

10

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON RCG HOLDINGS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,815,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,815,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON OO

11

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON C4S & CO., L.L.C.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,815,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,815,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON OO

12

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON PETER A. COHEN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,815,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,815,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON IN

13

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON MORGAN B. STARK
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,815,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,815,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON IN

14

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON JEFFREY M. SOLOMON
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,815,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,815,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON IN

15

CUSIP NO. 232674507

1	NAME OF REPORTING PERSON THOMAS W. STRAUSS
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,815,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,815,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,815,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9%
14	TYPE OF REPORTING PERSON IN

16

CUSIP NO. 232674507

The following constitutes Amendment No. 2 (“Amendment No. 2”) to the Schedule 13D filed by the undersigned.  This Amendment No. 2 amends the Schedule 13D as specifically set forth.

Item 4. Purpose of Transaction.

Item 4 is hereby amended to add the following:

On August 5, 2010, Ramius Value and Opportunity Advisors LLC (“Ramius”) delivered a letter to the Board highlighting its serious concerns regarding the Issuer’s announced discontinuation of the co-promotion of Savella with Forest Laboratories (the “Co-Promote”).  In the letter, Ramius questions why the Board entered into a transaction to discontinue the Co-Promote for only $2 million without first receiving advice from the two investment banking advisors it has engaged on the value and strategic merits of the Co-Promote and the impact of its termination on the Ramius acquisition proposal or other strategic alternatives available to the Issuer.  Ramius stated it believes this action is just another prime example of the Board failing to exercise its fiduciary responsibility to represent the best interest of all shareholders.  Ramius also again implored the Board to refrain from taking further actions or entering into any further transactions at this time.

Additionally, Ramius stated in the letter that it expects the Board to fulfill its fiduciary responsibility by fully evaluating the Ramius’ acquisition offer of $4.00 per share, which represents a 60% premium to the closing price of the Shares on the day prior to the announcement of its acquisition offer.  Ramius went on to say that it is willing to work with the Issuer to consummate a transaction in one of two ways; (1) by entering into a definitive agreement with the Issuer to purchase the Issuer for a fully financed and agreed upon price that would allow for a “go shop” period such that the Issuer could fulfill its fiduciary duty to determine if there are higher offers from other bidders; or (2) by participating in a formal auction process alongside other potential acquirers.

The Ramius Group concluded the letter by stating that it looks forward to entering into formal discussions regarding its acquisition offer and stands ready, willing, and able to move quickly to consummate a transaction with the Issuer.

A copy of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On August 5, 2010, Ramius Value and Opportunity Master Fund delivered to the Issuer a letter demanding, pursuant to Section 220 of the Delaware General Corporation Law, inspection of certain of the Issuer’s Books and Records (as defined therein) relating to, without limitation, certain decisions made by the Issuer’s Board and management, particularly with respect to the termination of the Co-Promote (the “August 5 Demand”).  The August 5 Demand is separate and distinct from the prior Section 220 Demand, dated July 22, 2010, which the Company rejected in its entirety in a letter dated July 29, 2010. In the August 5 Demand, Ramius stated its belief that the decision to terminate the Co-Promote cannot be the product of rational or disinterested corporate decision-making, nor can it serve any valid business pu rpose.  The purpose of the August 5 Demand is to allow Ramius to gather further information regarding potential mismanagement, wrongdoing and waste in connection with the decisions to discontinue the Issuer’s right to co-promote Savella.

A copy of the August 5 Demand is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 7. Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibit:

99.1 Letter to the Board of Directors, dated August 5, 2010.

99.2 Books and Records Demand, dated August 5, 2010.

17

CUSIP NO. 232674507

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated:  August 6, 2010

RAMIUS VALUE AND OPPORTUNITY MASTER FUND LTD By: Ramius Value and Opportunity Advisors LLC,        its investment manager   RAMIUS NAVIGATION MASTER FUND LTD By: Ramius Advisors, LLC,        its investment advisor   RAMIUS ENTERPRISE MASTER FUND LTD By: Ramius Advisors, LLC,        its investment advisor   RAMIUS VALUE AND OPPORTUNITY ADVISORS LLC By: Ramius LLC,        its sole member   RAMIUS OPTIMUM INVESTMENTS LLC By: Ramius Advisors, LLC,        its managing member COWEN OVERSEAS INVESTMENT LP By: Ramius Advisors, LLC,        its general partner     RAMIUS ADVISORS, LLC By: Ramius LLC,        its sole member   RAMIUS LLC By: Cowen Group, Inc.,         its sole member   COWEN GROUP, INC.   RCG HOLDINGS LLC By: C4S & Co., L.L.C.,        its managing member   C4S & CO., L.L.C.  

By:	/s/ Owen S. Littman
	Name:	Owen S. Littman
	Title:	Authorized Signatory

/s/ Owen S. Littman

OWEN S. LITTMAN

As attorney-in-fact for Jeffrey M. Solomon,

Peter A. Cohen, Morgan B. Stark and Thomas

W. Strauss

18

EX-99.1

Exhibit 99.1

August 5, 2010

TO: Mr. Jean-Pierre Millon, Lead Independent Director

CC: Board of Directors:

Mr. Roger L. Hawley

Dr. Amir Kalali

Dr. Jay D. Kranzler

Mr. Jon W. McGarity

Dr. Perry B. Molinoff

Dr. Tina S. Nova

Mr. Daniel H. Petree

Dear Jean-Pierre Millon:

As you know, Ramius Value and Opportunity Advisors LLC, together with its affiliates (collectively, “Ramius”), currently owns approximately 9.9% of the outstanding common stock of Cypress Bioscience, Inc. (“Cypress” or the “Company”), making us one of the largest shareholders of the Company.  On July 19, 2010, Ramius made an offer to acquire all of the shares of Cypress that we do not already own at a price of $4.00 per share in cash plus a 50% interest in BL-1020 if management or a third party is willing to fund the development.  Over two full weeks have elapsed since our offer was publicly disclosed and neither the Company nor its recently engaged investment banking advisors have provided any feedback regarding our offer, shown any willingness to negotiate a transaction, or begun a formal auction process to sell the Company in which Ramius would willingly participate.  Instead, we believe the Board has continued down the path of allowing management to engage in value destroying transactions, most recently demonstrated by yesterday’s announcement to discontinue the co-promotion of Savella (“the Co-Promote”) with Forest Laboratories (“Forest”) for a one-time cash payment of only $2.0 million.

The timing of the termination of the Co-Promote is deeply concerning.  In the midst of receiving and evaluating a bona fide offer to acquire the Company at a substantial premium to the unaffected stock price, it appears the Board entered into a transaction to discontinue the Co-Promote without receiving advice from the two investment banking advisors it has engaged to advise on the Ramius acquisition proposal and other strategic alternatives available to the Company.  Based on our understanding of the Co-Promote, we believe it may be worth substantially in excess of the $2.0 million paid by Forest.  Under the terms of the Co-Promote agreement, we believe that Forest was obligated to reimburse Cypress for a substantial portion of the cost of its sales force, in cash, in an amount equal to Forest’s cost of providing an equivalent physician detail.  This amounted to reimbursement payments of over $10 million over the last twelve months and analyst expectations of reimbursement payments of over $15 million per year going forward.  Further, our understanding of the Co-Promote is that the rights are effectively transferable, so that an acquirer of the Company could then require Forest to subsidize a portion of the acquirer’s sales force costs.  In part, our understanding of this agreement is from direct conversations with management who clearly communicated to us, as well as to other shareholders, that the Co-Promote was transferable and had significant potential strategic value to both Forest and others in the industry.

1

While we recognize that Cypress’ efforts to develop a commercial sales force have failed and the Company must therefore reduce operating expenses related to these commercial efforts, the timing of this transaction defies logic.  We believe the cost of retaining the Co-Promote while evaluating our acquisition proposal or other acquisition proposals is minimal when compared to the potential strategic value the Co-Promote could have for a potential acquirer of Cypress.  Our analysis shows that Forest will likely be able to save well in excess of $10 million of annual expenses by discontinuing the Co-Promote.  Given the upfront cash payment to Cypress of just $2 million, that implies this investment for Forest will payback in less than three months!  Our concern regarding the transaction to discontinue the Co-Promote is confirmed by the market’s reaction to this news.  During the trading session directly following this announcement on August 4, 2010, Cypress shares fell by over 3% in spite of a broad rally across all stock market indices.

This is just another prime example of the Board failing to exercise its fiduciary responsibility to represent the best interest of all shareholders.  If the Company and the Board felt it necessary and prudent to spend shareholder money to hire two separate bankers, we question why the Board would not ask its advisors for their opinion as to the value and strategic merits of the Co-Promote.  Rather than rushing to dispose of the Co-Promote, the Board should have considered its potential strategic value to an acquirer and determined how best to maximize its value.  Whether or not the Company had previously been considering the termination of the Co-Promote is irrelevant.  Given the Board’s recent action to hire investment banking advisors, we believe the prudent thing to do is to halt all extraordinary transactions until the Company has time to fully explore maximizing value for shareholders.  It is incumbent on all directors to realize that their fiduciary obligations are to look out for the best interest of shareholders and maximize value for the Company.  Unfortunately, this transaction once again shows the questionable business judgment within the boardroom to do a hasty and ill-conceived deal without determining the best overall course of action for shareholders.

To that end, we will be submitting an additional demand to review and inspect certain Books and Records of Cypress relating to the termination of the Co-Promote pursuant to Section 220 of the Delaware General Corporation Law so that we may better understand whether this action is in the best interest of shareholders.  As shareholders of Cypress, we believe we are entitled to these books and records and will take any legal action necessary to ensure our rights are upheld.

2

As we have stated in prior communication with management and the Board, we implore the Company to take no further action or enter into any further transactions at this time.  We expect the Board to fulfill its fiduciary responsibility by fully evaluating our acquisition offer of $4.00 per share in cash plus a potential interest in BL-1020, which represents at least a 60% premium to the closing price on the day prior to our offer.  The Board must understand its responsibilities to represent the best interest of all shareholders and we will continue to hold the Board accountable for its actions.

As we expressed in our meeting yesterday with the Company’s recently engaged investment banking advisors, we are willing to work with the Company to consummate a transaction in one of two ways:

1)   Ramius is willing to immediately engage in meaningful negotiations with the Company concerning our offer and upon the successful completion of such negotiations, execute a definitive agreement to purchase the Company for a fully financed and agreed upon price.  The definitive agreement would allow for a “go shop” period such that the Company could fulfill its fiduciary duty to determine if there are higher offers from other bidders.

2)   Ramius is willing to participate in a formal auction process alongside other potential acquirers.

We believe either of these two scenarios will ensure that shareholders of Cypress receive the highest and best possible price for their shares.  We look forward to entering into formal discussions regarding our acquisition proposal and stand ready, willing, and able to move quickly to consummate a transaction with the Company.

Best Regards,

/s/ Jeffrey C. Smith

Jeffrey C. Smith

Partner Managing Director

Ramius LLC

3

EX-99.2

Exhibit 99.2

RAMIUS VALUE AND OPPORTUNITY MASTER FUND LTD

c/o Ramius Value and Opportunity Advisors LLC

599 Lexington Avenue, 20th Floor

New York, New York 10022

August 5, 2010

VIA FACSIMILE AND OVERNIGHT DELIVERY

Cypress Bioscience, Inc.

4350 Executive Drive

Suite 325

San Diego, CA 92121

Attn: Sabrina Martucci Johnson, Corporate Secretary

Re:           Stockholder Inspection

Dear Ms. Johnson:

Ramius Value and Opportunity Master Fund Ltd and/or its affiliates (collectively, “Ramius”) own 3,815,000 shares of the Company’s common stock.  We write to you pursuant to Section 220 of the Delaware General Corporation Law (the “DGCL”) to demand the review and inspection of certain Books and Records of Cypress Bioscience, Inc. (the “Company”).  This demand is separate and distinct from our prior Section 220 Demand, dated July 22, 2010 (the “July 22 Demand”).  In a letter dated July 29, 2010, the Company rejected that July 22 Demand in its entirety.  Ramius reserves all rights with respect to the July 22 Demand.

On July 19, 2010, Ramius sent the Company a letter (the “July 19 Letter”) indicating Ramius’ desire to acquire all of the Company’s outstanding common stock that Ramius does not already own for $4.00 per share in cash plus a 50% interest in BL-1020 if management or a third party is willing to fund the development (the “Offer”).  The Offer represents at least a 60% premium over the closing price of the Company’s common stock on the prior trading day.  In the July 19 Letter, we requested that the Company “preserve the status quo and not . . . take any action that could cause a material adverse change to the Company’s financial condition or results of operation.”  We further specifically “implore[d] the Board to cease and desist from approving any further acquisitions and not enter into, or seek or propose to enter into, any further material transactions . . .  that could jeopardize the ability for shareholders to realize full and fair value for their investment.”

Yesterday morning, various media outlets reported that the Company’s Board and management had taken additional actions that destroy shareholder value.  These actions include discontinuing the Company’s rights to co-promote Savella with Forest Laboratories (the “Co-Promote”).  The Company apparently terminated the Co-Promote in exchange for a one-time payment of $2 million.

This decision to terminate the Co-Promote will fundamentally and negatively impact the value of the Company’s business.  Moreover, the Board and management appear to have effectuated this termination with little regard for their fiduciary obligations.  A number of factors lead us to this conclusion.  First, we understand that this transaction was entered into without the Company using a banker or consultant to properly value the Co-Promote.   The Company failed to get an independent valuation of the Co-Promote despite the fact that it just engaged two bankers to advise on our July 19 offer.  The Company’s failure to engage its bankers to value the Co-Promote reflects a disregard for responsible strategic decision-making.

Second, based on our understanding of the Co-Promote, we believe it may be worth substantially in excess of the consideration paid to the Company.  We understand that Forest will likely be able to save well in excess of $10 million in annual expenses by discontinuing the Co-Promote.  If so, the cash payment to the Company of just $2 million in exchange for terminating the Co-Promote appears grossly insufficient.   Given the savings resulting from the termination, Forest will recover this upfront payment in less than three months.  Further, our understanding of the Co-Promote is that the rights were effectively transferable, so that an acquirer of the Company could have then required Forest to subsidize a portion of the acquirer’s sales force costs.  The Company was therefore pote ntially in a position to transfer the Co-Promote to other industry players had it engaged in a proper process prior to termination.  Our understanding of this agreement derives, in part, from direct conversations with management, who indicated that the Co-Promote was transferable and had significant potential strategic value to both Forest and others in the industry.  

Lastly, the timing of this transaction belies any interest on the part of the Board and management to maximize shareholder value.  As a threshold matter, the transaction flies in the face of the admonition contained in our July 19 Letter to refrain from engaging in value-destroying transactions.  Moreover, other potential acquirers who may have had an interest in the Company may now be deterred as a result of the termination of the Co-Promote.  The disposition of this asset for insufficient value thus appears to be an effort to undermine our July 19 offer, deter other potentially interested acquirers, and, as a consequence, entrench the current  Board and management.  All of this works to the detriment of existing shareholders.

Given these facts, we believe the decision to terminate the Co-Promote cannot be the product of rational or disinterested corporate decision-making, nor can this decision serve any valid business purpose.  The purpose of this demand is to gather further information regarding potential mismanagement, wrongdoing and waste in connection with the decisions to discontinue the Company’s right to co-promote Savella.  We believe that this decision is a product of the same mismanagement, corporate governance and operational problems detailed in our prior letter of July 22, 2010.

For purposes of this letter, the term “Books and Records” means all documents and other nonverbal methods of information storage of any nature whatsoever referring or relating to the listed topic, including, but not limited to, memoranda, board minutes, telephone records, diaries, data compilations, emails and other correspondence authored by or received by any of the Company’s directors, officers or other employees.  Pursuant to DGCL Section 220, Ramius demands that it and its designated agents be given the opportunity to inspect the following Books and Records during the Company’s usual business hours and to make copies or extracts therefrom:

1. All Books and Records referring or relating to the Company’s decision to discontinue its rights to co-promote Savella with Forest Laboratories.

2. All Books and Records referring or relating to any communication between, on the one hand, any of the Company’s directors, officers, employees or consultants, and, on the other hand, any of Forest Laboratories’ directors, officers, employees or consultants relating to the Company’s decision to discontinue its rights to co-promote Savella with Forest Laboratories.

3. All Books and Records referring or relating to any analysis conducted by the Company in connection with its decision to discontinue its rights to co-promote Savella with Forest Laboratories, including, but not limited to, any financial analyses, financial models, and/or assessments of potential alternative transactions regarding the Co-Promote.

The DGCL requires the Company to respond to our above request within five business days of the date of this letter.  Accordingly, please advise in writing on a timely basis as to where and on what dates the Books and Records demanded will be made available to us or our designated agents.  Alternatively, if the Company desires, it can provide the Books and Records demanded without the need for inspection and copying by sending complete and unredacted copies of them to our designated agent as described below.  Should the Company refuse to provide the demanded Books and Records, please provide us with a detailed written explanation for the reasons behind that refusal.

Please direct all communications and responses to this demand to our counsel and designated agent, Douglas Rappaport of the law firm of Akin Gump Strauss Hauer & Feld LLP.   Mr. Rappaport’s contact information is as follows:

Douglas Rappaport

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY  10036

(212) 872-7412   Phone

(212) 872-1002  Fax

Darappaport@akingump.com

This demand also authorizes Mr. Rappaport and his respective partners, employees and any other persons designated by him, to conduct the inspection and copying of the Books and Records demanded, and to otherwise act on Ramius’ behalf.  Ramius has executed a Power of Attorney designating Mr. Rappaport as its agent, which is enclosed with this letter.  An affidavit relating to this notice and stockholder demand pursuant to Section 220 of the DGCL has also been attached to this letter.

This notice complies in all respects with applicable law.  If, however, the Company believes that this notice is incomplete or otherwise deficient in any respect, please contact Mr. Rappaport immediately so that any alleged deficiencies may be promptly addressed.

Please acknowledge receipt of this letter and the enclosures by signing and dating the enclosed copy of this letter and returning the same to the undersigned in the enclosed envelope.

Very truly yours,

Ramius Value and Opportunity Master Fund Ltd

/s/ Jeffrey C. Smith

Jeffrey C. Smith

Authorized Signatory

Receipt acknowledged on

August __, 2010

By:
	Name:
	Title:

cc: General Counsel of Cypress Bioscience, Inc.

Jay D. Kranzler, Chairman and CEO

Roger L. Hawley, Board Member

Dr. Amir Kalali, Board Member

Jon W. McGarity, Board Member

Jean-Pierre Millon, Board Member

Dr. Perry B. Molinoff, Board Member

Tina S. Nova, Board Member

Daniel H. Petree, Board Member

Douglas Rappaport, Esq.

AFFIDAVIT

STATE OF NEW YORK	)
	) ss.
COUNTY OF NEW YORK	)

I, Jeffrey C. Smith, being duly sworn upon oath, depose and state as follows:

1.           I am an authorized signatory of Ramius Value and Opportunity Master Fund Ltd (collectively with its affiliates, “Ramius”).  Ramius is the beneficial owner of 3,815,000 shares of common stock of Cypress Bioscience, Inc., a Delaware corporation (the “Company”).

2.           I am authorized on Ramius’ behalf to make the accompanying demand for the Company’s Books and Records pursuant to DGCL Section 220.

3.           The rights of Ramius in the 3,815,000 shares of stock of the Company have not been sold, assigned, hypothecated, pledged or otherwise transferred or disposed of to anyone whomsoever.

4.           The facts and statements contained in the Stockholder Demand Letter are true and correct to the best of my knowledge.

5.           Attached as Exhibit A to this Affidavit is a true and correct copy of a Credit Suisse brokerage statement, dated July 20, 2010, reflecting that Ramius Value and Opportunity Master Fund Ltd owns 3,067,500 shares of the Company’s common stock.

6.           Attached as Exhibit B to this Affidavit is a true and correct copy of the Schedule 13D filed by Ramius with the United States Securities and Exchange Commission on July 19, 2010 reflecting, among other things, that Ramius Value and Opportunity Master Fund Ltd owns 3,067,500 shares of the Company’s common stock.

I affirm the foregoing statements to be true and correct to the best of my knowledge and belief under penalty of perjury under the laws of the United States and the State of New York.

Dated:  August 5, 2010

/s/ Jeffrey C. Smith

Jeffrey C. Smith

SWORN TO AND SUBSCRIBED

before me this 5th day of

August, 2010

/s/ Caterina Melchionna 

NOTARY PUBLIC

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS that the undersigned hereby constitutes, designates and appoints Douglas Rappaport, and his partners, associates, employees and any other persons to be designated by him, as the undersigned’s true and lawful attorney-in-fact and agent for the undersigned, and in the undersigned’s name, place and stead, in any and all capacities, to conduct the inspection and copying of the books and records demanded in the enclosed Stockholder Inspection demand pursuant to DGCL Section 220, dated August 5, 2010.

IN WITNESS THEREOF, the undersigned has executed this instrument effective as of  August 5, 2010.

Ramius Value and Opportunity Master Fund Ltd

/s/ Jeffrey C. Smith

By: Jeffrey C. Smith

SWORN TO AND SUBSCRIBED

before me this 5th day of

August, 2010

/s/ Caterina Melchionna 

NOTARY PUBLIC