CombinatoRx and Neuromed Sign Merger Agreement

Merger to Create a Sustainable Biotechnology Company: Brings Together

Significant Product Assets, Unique Discovery Capabilities and Financial

Resources

CombinatoRx, Incorporated (NASDAQ: CRXX) and Neuromed Pharmaceuticals, Inc., a privately-held biopharmaceutical company, today announced they have entered into a definitive merger agreement under which CombinatoRx and Neuromed will merge in an all-stock transaction. Under the terms of the merger agreement, CombinatoRx is expected to issue approximately 36 million new shares of its common stock to Neuromed stockholders with each party owning approximately 50% of the voting power of the merged organization upon closing. Relative ownership of CombinatoRx will then be adjusted based upon the outcome of the FDA's review of the NDA product candidate, Exalgo(TM).

This merger brings together the product assets and financial resources of both organizations, including potential Exalgo(TM) milestones and royalty revenue and Neuromed's proven drug development expertise, with the CombinatoRx portfolio of product candidates and its unique drug discovery capabilities. The rights to Exalgo(TM), designed to be a once-daily, oral hydromorphone treatment seeking FDA approval for chronic to severe pain, were recently acquired by Mallinckrodt Inc., a subsidiary of Covidien plc, for $15 million in upfront payments, additional development funding of up to $16 million to cover internal and external costs associated with Exalgo, an approval milestone of $30 million, which could potentially increase up to $40 million, and tiered royalties on Exalgo(TM) net sales after approval. Neuromed has filed a New Drug Application for Exalgo(TM) with the FDA, which has a November 22, 2009 PDUFA review date.

"By combining forces with Neuromed, we can create a sustainable biotechnology company that has significant product assets, unique discovery capabilities and substantial financial resources. In addition, Christopher Gallen and the rest of the Neuromed management team will bring their considerable product development expertise to bear on the CombinatoRx pipeline and discovery platform. Collectively, the Neuromed team have contributed significantly to more than 10 successful NDAs or other major regulatory submissions and they have launched over 10 pharmaceutical products" said Robert Forrester, Interim President and CEO of CombinatoRx. "Further, this is a unique merger structure, with a contingent valuation element providing downside protection and upside participation for shareholders. This merger with Neuromed will leverage the operational efficiencies created by CombinatoRx's recent restructuring, including workforce reductions and divestiture of our Singapore subsidiary, to focus on our core technology, simplification of our balance sheet and reduced cash burn going forward. As a result, we expect to have sufficient cash to continue operations into 2012," concluded Forrester.

"Through this merger with CombinatoRx, we have the opportunity to build a biopharmaceutical organization with a novel approach to drug discovery and development," commented Christopher Gallen, MD, Ph.D., President and CEO of Neuromed. "CombinatoRx's unique discovery approach and the multiple mid- and early-stage product candidates in the CombinatoRx pipeline, combined with Neuromed's clinical development experience, project management driven culture and ion channel inhibitor programs, will enable the potential creation of new therapeutics. The recent CombinatoRx-Novartis oncology collaboration further recognizes the potential of the CombinatoRx technology by combining the innovative discovery for which Novartis is well known with the systematic exploration of combination therapy made possible by the CombinatoRx platform."

Covidien’s Mallinckrodt buys drug licensing rights from Neuromed

Covidien’s pharmaceutical products subsidiary Mallinckrodt Inc. has acquired the licensing rights to a drug candidate from Neuromed Pharmaceuticals Ltd in Canada.

Mallinckrodt bought the licensing rights for ExalgoTM, a formulation of an opioid analgesic, for an undisclosed sum.

This formulation of hydromorphone was developed by Mountain View, Calif.-based ALZA Corp. In 2007, Neuromed acquired the U.S. marketing rights to Exalgo from ALZA.

Mallinckrodt will be responsible for all commercialization activities for Exalgo in the United States, including marketing and sales.

Neuromed will work to complete the clinical development and the regulatory approval process.

Mallinckrodt Inc. will be responsible for all regulatory filings post-FDA approval. For a specified period, ALZA will remain responsible for the manufacturing, packaging and supply of Exalgo. The intellectual property covering the hydromorphone formulation under review will be owned by ALZA.

Neuromed has received a one-time upfront payment and could receive additional development and, if Exalgo is approved, regulatory approval milestone payments as well. ALZA will also receive regulatory milestone payments. In addition, Covidien will pay royalties to Neuromed and ALZA based on commercial sales of Exalgo.

Covidien expects that the upfront payment noted above, in combination with the payment to Nuvo Research announced Tuesday, will result in its fiscal third quarter research and development expense being higher than previously anticipated.

Covidien plc, formerly known as Tyco Healthcare, operates Covidien Imaging Solutions and Pharmaceutical Products, also known as Mallinckrodt Inc., which is located in St. Louis and provides medical imaging technology and pharmaceuticals. Covidien was spun off from Tyco International Ltd. in 2007.

With 2008 revenue of nearly $10 billion, Covidien has 3,000 employees in the St. Louis area and more than 41,000 employees worldwide.