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                                                                   Exhibit 10.39

                        TERMS AND CONDITIONS OF THE NOTES

The issue of US$[5,500,000/3,500,000/3,500,000/2,500,000/2,500,000] in aggregate
principal amount of 5 per cent. series [1/2/3/4/5] notes due 2009 (the "SERIES
[1/2/3/4/5] NOTES") of COMBINATORX (SINGAPORE) PTE LTD (the "ISSUER") was
authorised by a resolution of the Board of Directors of the Issuer passed on [ ]
and approved by the shareholders of the Issuer by way of shareholders'
resolutions in written form dated [ ]. The Series [1/2/3/4/5] Notes are issued
pursuant to a Subscription and Shareholders Agreement (the "SSA") dated August
[__], 2005 made between the Issuer, CombinatoRx Incorporated ("CRX US") and
BIOMEDICAL SCIENCES INVESTMENT FUND PTE LTD ("BMSIF") as subscriber.

1.     STATUS

       The Series [1/2/3/4/5] Notes constitute direct, unsubordinated and
       unconditional obligations of the Issuer and the Series [1/2/3/4/5] Notes,
       together with the US$[3,500,000/3,500,000/2,500,000/2,500,000/5,500,000]
       5 per cent. series [2/3/4/5/1] notes due 2009 ("SERIES 2/3/4/5/1 NOTES"),
       the US$[3,500,000/2,500,000/2,500,000/5,500,000/3,500,000] 5 per cent.
       series [3/4/5/1/2] notes due 2009 ("SERIES 3/4/5/1/2 NOTES"), the
       US$[2,500,000/2,500,000/5,500,000/3,500,000/3,500,000] 5 per cent. series
       [4/5/1/2/3] notes due 2009 ("SERIES 4/5/1/2/3 NOTES") and the
       US$[2,500,000/5,500,000/3,500,000/3,500,000/2,500,000] 5 per cent. series
       [5/1/2/3/4] notes due 2009 ("SERIES 5/1/2/3/4 NOTES") [OF THE ISSUER]/[TO
       BE ISSUED BY ISSUER], are or will be secured by a debenture creating a
       first fixed and first floating charge over certain assets of the Issuer
       (the "DEBENTURE") executed by the Issuer in favour of BMSIF as subscriber
       and shall at all times rank PARI PASSU and without any preference or
       priority among themselves. The payment obligations of the Issuer under
       the Series [1/2/3/4/5] Notes shall, save for such exceptions as may be
       provided by mandatory provisions of applicable law, at all times rank at
       least equally with all of its other present and future direct,
       unsubordinated, unconditional and unsecured obligations. The Issuer shall
       not issue any future debt with a higher preference or priority to that of
       the Series [1/2/3/4/5] Notes.

2.     FORM AND TITLE

       2.1    FORM

              The Series [1/2/3/4/5] Notes are issued in registered form. A Note
              certificate (a "CERTIFICATE") will be issued to the holder of the
              Series [1/2/3/4/5] Notes. Each Certificate will be numbered
              serially with an identifying number which will be recorded on the
              relevant Certificate and in the register of Noteholders which will
              be kept by the Issuer.

       2.2    TITLE

              Title to the Series [1/2/3/4/5] Notes passes only by transfer and
              registration in the register of Noteholders as described in
              Condition 3. The holder of the Series [1/2/3/4/5] Notes will
              (except as otherwise required by law) be treated as its

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              absolute owner for all purposes (whether or not it is overdue and
              regardless of any notice of ownership, trust or any interest in it
              or any writing on, or the theft or loss of, the Certificate issued
              in respect of it) and no person will be liable for so treating the
              holder. In these Terms and Conditions (these "CONDITIONS")
              "NOTEHOLDER" and (in relation to a Note) "HOLDER" mean the person
              in whose name the Series [1/2/3/4/5] Notes are registered.

3.     TRANSFERS OF SERIES [1/2/3/4/5] NOTES; ISSUE OF CERTIFICATES

       3.1    REGISTER

              The Issuer will cause to be kept at its registered office a
              register on which shall be entered the names and addresses of the
              holders of the Series [1/2/3/4/5] Notes and the particulars of the
              Series [1/2/3/4/5] Notes held by each Noteholder and of all
              transfers of the Series [1/2/3/4/5] Notes (the "REGISTER"). Each
              Noteholder shall be entitled to receive only one Certificate in
              respect of its entire holding.

       3.2    TRANSFERS

              No Noteholder shall transfer all or any part of the Series
              [1/2/3/4/5] Notes held by it, save in accordance with the
              provisions of Section 12 of the SSA.

              Any transfer of the Series [1/2/3/4/5] Notes (or part thereof) in
              compliance with Section 12 of the SSA shall be effected by
              delivery of the Certificate, with the form of transfer attached
              thereto duly completed and signed by the holder or its attorney
              duly authorised in writing, to the registered office of the Issuer
              Provided Always that (i) no transfer of title to the Series
              [1/2/3/4/5] Notes will be valid unless and until entered on the
              Register; and (ii) no transfer of title to the Series [1/2/3/4/5]
              Notes shall be made pursuant to any circumstances in which an
              offer or sale, or invitation for purchase, of the Series
              [1/2/3/4/5] Notes is made to the public in Singapore. Upon the
              transfer of the Series [1/2/3/4/5] Notes, the Issuer shall execute
              all documents and do all things necessary to extend the benefit of
              the Debenture to the transferee of such Series [1/2/3/4/5] Notes.

       3.3    DELIVERY OF NEW CERTIFICATES

              3.3.1  Each new Certificate to be issued upon a transfer of the
                     Series [1/2/3/4/5] Notes will, within seven business days
                     of receipt by the Issuer of the form of transfer duly
                     completed and signed, be made available for collection at
                     the registered office of the Issuer or, if so requested in
                     the form of transfer, be mailed by uninsured mail at the
                     risk of the holder entitled to the Series [1/2/3/4/5] Notes
                     (but free of charge to the holder) to the address specified
                     in the form of transfer.

              3.3.2  For the purposes of these Conditions, "BUSINESS DAY" shall
                     mean a day other than Saturdays, Sundays or public holidays
                     on which commercial banks are open for business in
                     Singapore.

       3.4    FORMALITIES FREE OF CHARGE

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              Registration of a transfer of Series [1/2/3/4/5] Notes will be
              effected without charge by or on behalf of the Issuer.

4.     NEGATIVE PLEDGE

       So long as any of the Series [1/2/3/4/5] Notes has not been redeemed in
       accordance with these Conditions, the Issuer shall not create or permit
       to subsist any mortgage, charge, pledge, lien or other form of
       encumbrance or security interest upon the Issuer's Intellectual Property
       Rights save for the security created by or permitted by the Debenture,
       without the prior written consent of the Noteholder, which consent shall
       not be unreasonably withheld.

       For the purposes of these Conditions, "INTELLECTUAL PROPERTY RIGHTS"
       shall mean:

       1)       Any and all copyrights, copyright applications, copyright
                registration and like protection in each work or authorship and
                derivative work thereof, whether published or unpublished and
                whether or not the same also constitutes a trade secret, now or
                hereafter existing, created, acquired or held by the Issuer);

       2)       Any and all trade secrets and any and all intellectual property
                rights in computer software and computer software products now
                or hereafter existing, created, acquired or held by the Issuer;

       3)       Any and all design rights that may be available to the Issuer
                now or hereafter existing, created, acquired or held;

       4)       All patents, patent applications and like protections,
                including, without limitation, improvements, divisions,
                continuations, renewals, reissues, extensions and
                continuations-in-part of the same, including the patents and
                patent applications of the Issuer; and

       5)       Any trademark and servicemark rights, whether registered or not,
                applications to register and registrations of the same and like
                protections, and the entire goodwill of the business of the
                Issuer connected with and symbolized by such trademarks.

5.     INTEREST

       5.1    The Series [1/2/3/4/5] Notes shall bear interest at a PER ANNUM
              rate (based on a year of twelve 30 day months) of 5 per cent. on
              the principal amount of the Series [1/2/3/4/5] Notes, from the
              Issue Date up to and including the Maturity Date, which shall be
              compounded and accumulated and payable on the Maturity Date,
              unless the Series [1/2/3/4/5] Notes are redeemed by the Issuer
              before the Maturity Date pursuant to Condition 7.3.
              Notwithstanding the foregoing, such interest rate shall not exceed
              the highest rate permitted by applicable law to be charged on
              commercial loans. For the purposes of these Conditions, "ISSUE
              DATE" shall mean the relevant Note Closing Date in respect of the
              Series [1/2/3/4/5] Notes, as defined in the SSA.

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       5.2    Commencing upon the occurrence of an Event of Default (as defined
              in the SSA) of CRx US or the Issuer pursuant to Section 15.2.1 of
              the SSA, the PER ANNUM rate of interest (based on a year of twelve
              30 day months) applicable to each Series [1/2/3/4/5] Note shall be
              ten per cent. (the "DEFAULT INTEREST RATE"), which shall accrue
              from the date of issuance for each Series [1/2/3/4/5] Note until
              payment is made in full and shall be compounded annually.
              Notwithstanding the foregoing, the Default Interest Rate shall not
              exceed the highest rate permitted by applicable law to be charged
              on commercial loans.

6.     PAYMENTS

       6.1    PRINCIPAL AND INTEREST

              Subject to the provisions of Condition 7.2, payment of principal
              and interest will be made by transfer to the registered account of
              the Noteholder. Payment of principal is only required to be made
              after surrender of the relevant Certificate at the registered
              office of the Issuer.

       6.2    REGISTERED ACCOUNTS

              For the purposes of this Condition 6, a Noteholder's registered
              account means the Singapore dollar account maintained by or on
              behalf of it, details of which shall be furnished to the Issuer by
              the Noteholder on or before the close of business on the second
              business day before the due date for payment.

       6.3    FISCAL LAWS

              All payments are subject in all cases to any applicable laws and
              regulations. No commissions or expenses shall be charged to the
              Noteholder in respect of such payments.

       6.4    PAYMENT INITIATION

              Where payment is to be made by transfer to a registered account,
              payment instructions (for value on the due date or, if that is not
              a business day, for value on the first following day which is a
              business day) will be initiated on the due date for payment (or,
              if it is not a business day, the immediately following business
              day).

       6.5    ANNOTATION OF REGISTER

              If an amount which is due on the Series [1/2/3/4/5] Notes is not
              paid in full, the Issuer will annotate the Register with a record
              of the amount (if any) in fact paid.

7.     REDEMPTION, PURCHASE AND CANCELLATION

       7.1    MATURITY

              Unless previously redeemed as provided herein and subject to these
              Conditions, the Issuer will redeem each Series [1/2/3/4/5] Note at
              100 per cent. of its principal amount together with interest
              accrued thereon on the Maturity Date. The Noteholder is therefore
              entitled to receive from the Issuer on the Maturity Date, the
              unpaid principal amount (excluding interest) of the Series
              [1/2/3/4/5] Notes

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              outstanding as at the Maturity Date (the "OUTSTANDING PRINCIPAL
              BALANCE") in cash, together with all interest accrued thereon.

              For the purposes of these Conditions, the term "MATURITY DATE"
              shall mean 31 December 2009.

       7.2    PAYMENT ON MATURITY / REDEMPTION

              7.2.1  The Issuer shall discharge its payment obligations pursuant
                     to Condition 7.1 wholly in cash, provided however that if
                     the Noteholder is BMSIF or its Affiliate (as defined in the
                     SSA), the Noteholder may elect for the Issuer to discharge
                     its obligations to pay to the Noteholder the Outstanding
                     Principal Balance either:

                     (i)       wholly in cash, together with all interest
                               accrued thereon; or

                     (ii)      by such other mode of payment which the
                               Noteholder may elect pursuant to its rights under
                               Clause 3.1 of the Swap-Up Agreement dated August
                               [__], 2005 made between the Issuer, CRx US and
                               BMSIF (the "SUA"); or

                     (iii)     partly in cash (together with all interests
                               accrued on the relevant portion of the
                               Outstanding Principle Balance that the Noteholder
                               elects to be paid in cash), with the remainder of
                               the Outstanding Principle Balance to be satisfied
                               by such other mode of payment referred to in
                               paragraph (ii) above.

                     For the avoidance of doubt, where the Noteholder has given
                     a notice to the Issuer declaring the Series [1/2/3/4/5]
                     Notes to be immediately due and payable pursuant to
                     Condition 8, the provisions of this Condition 7 shall not
                     apply to any payment due to the Noteholder on the Series
                     [1/2/3/4/5] Notes.

              7.2.2  Six months prior to the Maturity Date, the Noteholder
                     (being BMSIF or its Affiliate) shall communicate to the
                     Issuer its projected intent regarding the manner in which
                     the Issuer shall discharge its payment obligations pursuant
                     to Condition 7.1, such expression to be a non-binding, good
                     faith estimate of the method of discharging such payment.
                     The Issuer and the Noteholder shall then maintain
                     communications during the following 120 days, during which
                     the Noteholder agrees to notify the Issuer of any material
                     changes to its projected intent. No later than 60 days
                     prior to the Maturity Date, the Noteholder shall exercise
                     its election as to the manner in which the Issuer shall
                     discharge its payment obligations to the Noteholder
                     pursuant to Condition 7.1 by way of the giving to the
                     Issuer of a notice in writing (the "FIRST ELECTION NOTICE")
                     in substantially the form set out in Schedule 1.

                     The First Election Notice shall set out the amount of the
                     Outstanding Principal Balance payable to the Noteholder and
                     the manner in which

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                     such amount is to be paid in accordance with Condition
                     7.2.1. In the event that the Noteholder wishes to elect for
                     the Issuer to discharge its payment obligations in the
                     manner set out in Condition 7.2.1(iii), the First Election
                     Notice shall also specify the mode of payment with respect
                     to the relevant portion of the Outstanding Principle
                     Balance which the Noteholder elects pursuant to its rights
                     under Clause 3.1 of the SUA.

              7.2.3  If the Issuer discharges its payment obligations pursuant
                     to Condition 7.1 in the manner set out in Condition
                     7.2.1(ii) or (iii), the Issuer and the Noteholder agree
                     that upon the due performance by the Issuer of its
                     obligations under the SUA pursuant to the exercise by the
                     Noteholder of its rights under Clause 3.1 of the SUA, such
                     performance shall constitute full satisfaction of the
                     relevant proportion of the Issuer's payment obligations to
                     the Noteholder under this Condition 7.2 with respect to the
                     relevant proportion of the Outstanding Principle Balance.

              7.2.4  In the event the Noteholder does not exercise a First
                     Election Notice to the Issuer pursuant to Condition 7.2.2
                     above, the Noteholder shall be deemed to have elected for
                     the Issuer to pay to the Noteholder the Outstanding
                     Principle Balance wholly in cash.

       7.3    EARLY REDEMPTION/PREPAYMENT

              7.3.1  The Issuer shall have the right to redeem in cash (or such
                     other consideration as the Issuer and the Noteholder may,
                     in their sole respective discretion, agree) the Series
                     [1/2/3/4/5] Notes in full or in part during the period
                     after the Initial Closing (as defined in the SSA) and
                     before the Maturity Date, provided an irrevocable notice in
                     writing (the "PREPAYMENT NOTICE") is delivered by the
                     Issuer to the Noteholder no later than 40 days, and no
                     earlier than 180 days prior to the proposed date of
                     pre-payment (the "PREPAYMENT DATE").

              7.3.2  The Prepayment Notice shall specify:

                     (i)       the Note(s) to be prepaid;

                     (ii)      the portion of the Outstanding Principal Balance
                               of such Notes to be prepaid (the "OUTSTANDING
                               PRINCIPAL BALANCE TO BE PREPAID");

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                     (iii)     the resulting amount which shall equal, with
                               respect to any Outstanding Principal Balance To
                               Be Prepaid, the sum of (i) such Outstanding
                               Principal Balance To Be Prepaid multiplied by
                               1.25 and (ii) the accrued interest with respect
                               to such Outstanding Principal Balance To Be
                               Prepaid); and

                     (iv)      the Prepayment Date.

              7.3.3  The Issuer shall discharge its payment obligations pursuant
                     to Condition 7.3.1 by paying the Noteholder the amount
                     specified in Condition 7.3.2(iii) wholly in cash (or such
                     other consideration as the Issuer and the Noteholder may,
                     in their sole discretion, agree), unless, provided the
                     Noteholder is BMSIF or its Affiliate, the Noteholder elects
                     for the Issuer to discharge such payment obligations
                     either:

                     (i)       by such other mode of payment which the
                               Noteholder may elect pursuant to its rights under
                               Clause 3.2 of the SUA; or

                     (ii)      partly in cash (in which case the Issuer shall
                               pay to the Noteholder 125% of such portion of the
                               principal amount of the Outstanding Principle
                               Balance To Be Prepaid together with accrued but
                               unpaid interest on such principal amount) and the
                               remainder of the Outstanding Principle Balance To
                               Be Prepaid by such other mode of payment referred
                               to in paragraph (i) above.

              7.3.4  Upon the receipt by the Noteholder of a Prepayment Notice
                     and if the Noteholder (being BMSIF or its Affiliate) wishes
                     to elect for the Issuer to discharge its payment
                     obligations pursuant to Condition 7.3.1 in the manner set
                     out in Condition 7.3.3(i) or 7.3.3(ii), the Noteholder
                     shall be entitled, on any day at least 20 days before the
                     Prepayment Date, to so elect by giving the First Election
                     Notice to the Issuer.

                     The First Election Notice shall set out the amount of the
                     Outstanding Principal Balance To Be Prepaid payable to the
                     Noteholder and the manner in which such amount is to be
                     paid in accordance with Condition 7.3.3. In the event that
                     the Noteholder wishes to elect for the Issuer to discharge
                     its payment obligations in the manner set out in Condition
                     7.3.3(ii), the First Election Notice shall also specify the
                     mode of payment with respect to the relevant portion of the
                     Outstanding Principal Balance To Be Prepaid which the
                     Noteholder elects pursuant to its rights under Clause 3.2
                     of the SUA.

              7.3.5  If the Issuer discharges its payment obligations pursuant
                     to Condition 7.3.1 in the manner set out in Condition
                     7.3.3(i) or 7.3.3(ii), the Issuer and the Noteholder agree
                     that upon the due performance by

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                     the Issuer of its obligations under the SUA pursuant to the
                     exercise by the Noteholder of its rights under Clause 3.2
                     of the SUA, such performance shall constitute full
                     satisfaction of the relevant proportion of the Issuer's
                     payment obligations to the Noteholder under this Condition
                     7.3 with respect to the relevant proportion of the
                     Outstanding Principle Balance To Be Prepaid.

       7.4    CANCELLATION

              All Series [1/2/3/4/5] Notes which are redeemed by the Issuer or
              exchanged into shares in CRx US pursuant to the SUA, will
              forthwith be cancelled. Certificates in respect of all Series
              [1/2/3/4/5] Notes cancelled shall be destroyed by the Issuer and
              such Series [1/2/3/4/5] Notes may not be reissued or resold.

8.     EVENTS OF DEFAULT

       8.1    In the event of an Event of Default of CRx US or the Issuer
              pursuant to Section 15.2.1 of the SSA, then the outstanding
              balance on the Series [1/2/3/4/5] Notes (together with any accrued
              and unpaid interest on such Notes from the date of issuance to the
              relevant Default Date, such interest accruing at the Default
              Interest Rate) (the "DEFAULT AMOUNT") shall, at the option of the
              Noteholder, become immediately due and payable to the Noteholder
              in full in cash, subject to Condition 8.2.

       8.2    If the Noteholder is BMSIF or its Affiliate, the Noteholder may,
              in lieu of receiving payment of the Default Amount wholly in cash,
              elect for the Issuer to discharge its obligations to pay the
              Default Amount:

              8.2.1  by such other mode of payment which the Noteholder may
                     elect pursuant to its rights under Clause 4.2.2 of the SUA;
                     or

              8.2.2  partly in cash and the remainder by such other mode of
                     payment referred to in paragraph 8.2.1 above.

       8.3    Any election by the Noteholder (being BMSIF or its Affiliate) as
              to the manner in which the Issuer discharges its payment
              obligations to the Noteholder pursuant to Condition 8.2 above
              shall be exercised by way of the giving by the Noteholder of a
              notice in writing (the "SECOND ELECTION NOTICE") in substantially
              the form set out in Schedule 2 to the Issuer not later than 30
              days after the Default Date.

              The Second Election Notice shall set out the amount of the Default
              Amount payable to the Noteholder and the manner in which such
              amount is to be paid in accordance with Condition 8.2. In the
              event that the Noteholder wishes to elect for the Issuer to
              discharge its payment obligations in the manner set out in
              Condition 8.2.2, the Second Election Notice shall also specify the
              mode of payment with respect to the relevant portion of the
              Default Amount which the Noteholder elects pursuant to its rights
              under Clause 4.2.2 of the SUA.

       8.4    If the Issuer discharges its payment obligations pursuant to
              Condition 8.1 in the manner set out in Condition 8.2.1 or 8.2.2,
              the Issuer and the Noteholder agree

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              that upon the due performance by the Issuer of its obligations
              under the SUA pursuant to the exercise by the Noteholder of its
              rights under Clause 4.2.2 of the SUA, such performance shall
              constitute full satisfaction of the relevant proportion of the
              Issuer's payment obligations to the Noteholder under this
              Condition 8 with respect to the relevant proportion of the Default
              Amount.

9.     ENFORCEMENT

       At any time after the Series [1/2/3/4/5] Notes have become due and
       repayable pursuant to these Conditions and the Issuer has failed to
       comply with its obligations under these Conditions, each Noteholder may,
       at its discretion and without further notice, take such proceedings
       against the Issuer as it may think fit to enforce repayment of the Series
       [1/2/3/4/5] Notes and to enforce the provisions of these Conditions and
       the Debenture.

10.    REPLACEMENT OF CERTIFICATES

       If any Certificate is mutilated, defaced, destroyed, stolen or lost, it
       may be replaced at the registered office of the Issuer upon payment by
       the claimant of such costs as may be incurred in connection therewith and
       on such terms as to evidence and indemnity as the Issuer may reasonably
       require. Mutilated or defaced Certificates must be surrendered before
       replacements will be issued.

11.    NOTICES

       All notices to Noteholders shall be validly given if mailed to them at
       their respective addresses in the register of Noteholders maintained by
       the Issuer. Any such notice shall be deemed to have been given on the
       second day after being so mailed.

12.    CONTRACTS (RIGHTS OF THIRD PARTIES), CHAPTER 53B

       No person other than a Noteholder shall have any right to enforce any
       term or condition of the Series [1/2/3/4/5] Notes or these Conditions
       under the Contracts (Rights of Third Parties) Act Chapter 53B.

13.    GOVERNING LAW

       The Series [1/2/3/4/5] Notes are governed by, and shall be construed in
       accordance with, the laws of Singapore.