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Critical Therapeutics Signs Definitive Agreement to Merge with Cornerstone BioPharma

Business Wire, May 1, 2008

Transaction To Create a Respiratory-Focused Specialty Pharmaceuticals Company with a Diversified Commercial and Clinical Product Pipeline

Joint Conference Call to be held on May 2, 2008 at 9:00 a.m. EDT

LEXINGTON, Mass. and CARY, N.C. -- Critical Therapeutics, Inc. (NASDAQ: CRTX) and Cornerstone BioPharma Holdings, Inc., a privately-held company, today announced the signing of a definitive merger agreement. Cornerstone is a specialty pharmaceutical company focused on developing and commercializing prescription medications for respiratory disorders. The stock-for-stock transaction is targeted to close in the fourth quarter of 2008.

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"The merger between Critical Therapeutics and Cornerstone creates a specialty pharmaceutical company focused on respiratory diseases," said Trevor Phillips, Ph.D., president and chief executive officer of Critical Therapeutics. "It brings together Cornerstone's suite of products marketed to respiratory specialists with Critical Therapeutics' ZYFLO CR(TM) (zileuton) extended-release tablets for the treatment of asthma. After reviewing alternatives during a strategic review process over the past six months, we believe that the product synergies created by a merger with Cornerstone offer the best opportunity to drive stockholder value."

Craig Collard, Cornerstone's president and chief executive officer, said, "We believe this transaction will allow both companies to maximize the value of our marketed products and better exploit our commercial resources. We believe that the critical mass we aim to achieve as a specialty pharmaceutical company can enhance significantly our standing in the market."

The principal commercial assets of the combined company will comprise a number of marketed products including the following:

* ZYFLO CR(TM): FDA-approved ZYFLO CR[TM] (zileuton) extended-release tablets, a leukotriene synthesis inhibitor for the prophylaxis and chronic treatment of asthma in adults and children 12 years of age and older. ZYFLO CR is not indicated for use in the reversal of bronchospasm in acute asthma attacks;

* Spectracef[R]: FDA-approved Spectracef[R] (cefditoren pivoxil), a third-generation cephalosporin for the treatment of pathogens commonly associated with respiratory diseases in adults and adolescents 12 years of age and older; and

* AlleRx[R]: AlleRx[R] Dose Pack family of products used for the temporary relief of symptoms associated with allergic rhinitis.

Product Development Plans

The combined company's clinical and preclinical pipeline will include a number of product candidates. The combined company will implement a strategic review of its product development pipeline and is expected to pursue line extensions of Spectracef[R] as part of the life cycle plan for that product with any new products targeted for launch during the two years following the closing of the transaction. Following the strategic review, the combined company may seek to maximize the value of any non-core programs through out-licensing, divestiture or spin-off transactions.

Details of the Proposed Transaction

The merger will take the form of a stock-for-stock merger intended to qualify as a tax-free reorganization. Under the terms of the agreement, all outstanding shares of Cornerstone's common stock will be converted into and exchanged for shares of Critical Therapeutics' common stock and all outstanding Cornerstone options and warrants will be assumed by Critical Therapeutics and become options and warrants to acquire Critical Therapeutics' common stock. The merger agreement provides for Critical Therapeutics to issue in the merger to Cornerstone stockholders, and assume Cornerstone options and warrants that will represent, an aggregate of 101.5 million shares of Critical Therapeutics' common stock, subject to adjustment as a result of a reverse stock split to occur in connection with the closing of the merger. Following the transaction, Cornerstone's stockholders will own approximately 70 percent, and Critical Therapeutics' stockholders will own approximately 30 percent, of the combined company's common stock, after giving effect to shares issuable pursuant to outstanding Cornerstone options and warrants, but without giving effect to any shares issuable pursuant to outstanding Critical Therapeutics options and warrants.

The merger agreement has been approved by the Boards of Directors of both companies and requires approval by the stockholders of Cornerstone. In addition, Critical Therapeutics' stockholders are required to approve the issuance of Critical Therapeutics' stock to Cornerstone's stockholders in the merger. In connection with the execution of the definitive agreement, Healthcare Ventures and Advanced Technology Ventures, who together hold approximately 19 percent of the issued and outstanding common stock of Critical Therapeutics, have entered into agreements whereby they have agreed to vote their shares in favor of the merger. In addition, holders of a majority of the shares of Cornerstone's issued and outstanding common stock have entered into agreements whereby they have agreed to vote their Cornerstone shares in favor of the merger and refrain from selling any of the Critical Therapeutics shares they receive in the merger for six months following the closing of the transaction.

Business Services Industry

Critical Therapeutics Signs Definitive Agreement to Merge with Cornerstone BioPharma

Business Wire, May 1, 2008

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