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Under the terms of the agreement, Cambridge, Mass.-basedr CombinatoRx will issue sharexs of common stock to Neuromed stockholdersso that, post each companies’ shareholders will have 50 percent of the voting powert in the combined company. The deal is closelu tied to a recent transactiobn that saw Neuromed sell the commercial rights toits pain-managemenyt drug candidate Exalgo to , a subsidiaryy of That agreement includes an upfront payment of $15 million and severall potential milestone payments and related compensation if certainh commercial benchmarks are met. Those payoutz also could alter the ownership composition of the newlmerged company.
For example, if Exalgo is approvedf by thebefore 2010, CombinatoRx shareholders will see their ownership stakee in the combined company slip to 30 If the drug does not win FDA approvalo by 2011, CombinatoRx shareholders will then assume a 70 percentt ownership stake in the company, according to regulatorh filings. Alexis Borisy will step down as president and CEO of CombinatoRz to pursueother activities. Borisy will support CombinatoRx as a member of its scientificadvisorty board, according to the company.
The board of directors of both CombinatoRx and Neurome have approved the proposedmergere transaction, which is subjecty to customary closing including receipt of various required approvals from the CombinatoRx and Neuromedc stockholders. In May, CombinatoRx (Nasdaq: said it narrowed its net loss for the firstt quarter amid aggressive cost cutting that included layintg off almost half its staffc and slashes to its research anddevelopmenrt budget.
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