Vancouver-based biotech Neuromed merges with Nasdaq-listed CombinatoRx

By The Canadian Press

VANCOUVER, B.C. - Neuromed Pharmaceuticals, Inc., a privately held Vancouver-based biotechnology company specializing in pain drugs, has agreed to merge with CombinatoRx, Inc., (NASDAQ: CRXX) in an all-stock transaction.

It's envisaged that shareholders of the two companies will each own 50 per cent of the combined company upon closing of the deal.

However, Neuromed's stake could swing between 30 and 70 per cent depending on the timing of U.S. Food and Drug Administration approval of Neuromed's new pain drug Exalgo and the revenue stream that would provide.

Both boards have already approved the transaction, which is expected to close during the fourth quarter, subject to stockholder approval. The new company will operate under the CombinatoRx name and is expected to continue to trade under the symbol (CRXX) on the NASDAQ Global Market.

Neuromed's Christopher Gallen will be chief executive and president of the combined company and the chief scientific officer will be Neuromed's Terrance Snutch.

Robert Forrester, the interim president and CEO of the Cambridge, Mass.-based CombinatoRx, will be executive vice-president and chief operating officer of the combined company while CombinatoRx's Justin Renz will be chief financial officer.

Under the proposed transaction, CombinatoRx will issue 36 million new shares to Neuromed shareholders. The shares closed Wednesday at 80.1 cents US and fell 1.1 cents on Thursday.

At that price, the shares being offered to Neuromed would be worth just over US$28 million.

In a conference call, Forrester called the merger "the best opportunity to create shareholder value going forward," while Gallen said he believed it would allow the partners to "build a sustainable biotechnology company."