Discovery Partners International, Inc. (DPI), and Infinity Pharmaceuticals, Inc., a private company, have entered into a definitive merger agreement to create a new public entity focused on cancer drug discovery and development. The combined company, to be known as Infinity Pharmaceuticals, Inc., will operate from IPI’s current headquarters in Cambridge, MA, be publicly traded, and will have a lead product candidate in multiple Phase I clinical trials, a second product candidate scheduled to enter the clinic in late 2006, a pipeline of proprietary small molecule preclinical candidates, and partnerships with Novartis, Johnson & Johnson and Amgen.

“With the financial resources provided by this transaction, Infinity will be well positioned to create substantial value for patients and stockholders,” said Steven H. Holtzman, chairman and chief executive officer, IPI. “The merger is a creative, time efficient, and cost effective means for Infinity to accelerate the discovery, development and delivery to patients of important new medicines.”

“We believe that the combination of these companies will provide stockholders an opportunity to participate in a public company with a profile that matches the market’s interest in near-term product opportunities with significant potential,” said Michael C. Venuti, Ph.D., acting chief executive officer, DPI. “After an extensive review of potential merger candidates and their product pipelines, Discovery Partners identified Infinity Pharmaceuticals as an organization with the potential to create significant value for our stockholders.”

Upon closing, the combined company will have a pipeline of product candidates and an experienced leadership team. Products in development will include:

*  IPI-504 — Infinity’s lead novel, proprietary anti-cancer product candidate, which selectively inhibits Heat Shock Protein 90 (Hsp90) in cancerous cells. IPI-504 is currently being evaluated in two ongoing Phase I clinical trials in patients with relapsed, refractory multiple myeloma and relapsed, refractory gastrointestinal stromal tumors (GIST).  Infinity plans to begin a Phase II study at the end of 2006, pending results from the multiple myeloma and GIST trials.  Infinity owns all rights to IPI-504.

*  IPI-609 — Infinity’s second novel, proprietary anti-cancer agent, in late-stage preclinical research. IPI-609 selectively inhibits the Hedgehog pathway, which has been implicated in many of the most deadly cancers. Infinity is planning to file an IND for IPI-609 in late 2006 for the first of several planned clinical studies in pancreatic cancer, small cell lung cancer and metastatic prostate cancer. Infinity owns all rights to IPI-609.

*  Inhibitors directed to the Bcl-2 family of proteins, key regulators of programmed cell death, or apoptosis, which are currently in preclinical development for use alone or in combination to sensitize a broad range of solid tumors to currently available chemotherapeutics.  On March 6, 2006, Infinity entered into an alliance with Novartis to collaboratively discover, develop, and commercialize drugs targeting Bcl-2 protein family members for the treatment of a broad range of cancer indications.

DPI is actively seeking to transfer ownership of its drug discovery services units in San Diego; Basel, Switzerland; and Heidelberg, Germany to an organization or organizations that will assume DPI’s existing fee-for-service commitments. These units focus on synthetic chemistry, assay development, high-throughput screening, and natural products, as well as other drug discovery assets, including ongoing service partnerships. DPI’s board of directors has made it a priority to transfer key personnel and key service agreements to one or more qualified organizations that are currently performing such services at a level equal to those of DPI. The DPI Compound Management Facility in South San Francisco, currently under contract to the National Institute of Mental Health, National Institutes of Health (NIH) as part of the new NIH Chemo-Genomic Roadmap initiative, will continue to be fully staffed and operate as such.

Under the terms of the agreement, DPI would issue to IPI stockholders common stock equivalent to approximately 69% of the combined company. DPI stockholders would own approximately 31%. The merger agreement has been approved by both companies’ boards of directors and will need to be approved by both companies’ stockholders.