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Print Edition StoriesWednesday, July 1, 2009
Biotech CombinatoRx to merge with Canada’s Neuromed Pharma
By Craig M. Douglas
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Drug developer CombinatoRx Inc. said Wednesday it has agreed to merge with Canada’s Neuromed Pharmaceuticals Ltd.
Under the terms of the agreement, Cambridge-based CombinatoRx (Nasdaq: CRXX) will issue shares of common stock to Neuromed stockholders so that, post merger, each company’s shareholders will have 50 percent of the voting power in the combined company. As part of the deal, commercial rights to Neuromed’s pain-management drug candidate Exalgo were sold to Mallinckrodt Inc., a subsidiary of Covidien plc. The deal included an upfront payment of $15 million and several potential milestone payments and related compensation if certain commercial benchmarks are met. Those payouts also could alter the ownership composition of the newly merged company.
For example, if Exalgo is approved by the U.S. Food and Drug Administration before 2010, CombinatoRx shareholders will see their ownership stake in the combined company slip to 30 percent. If the drug does not win FDA approval by 2011, CombinatoRx shareholders will then assume a 70 percent ownership stake in the company, according to regulatory filings.
In May, CombinatoRx said it narrowed its net loss for the first quarter amid aggressive cost cutting that included laying off almost half its staff and reducing its research and development budget.
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