DEVELOPMENT AND TRANSITION SERVICES AGREEMENT

Exhibit 10.39

DEVELOPMENT AND TRANSITION SERVICES AGREEMENT

T HIS D EVELOPMENT AND T RANSITION S ERVICES A GREEMENT (the “ Agreement ”) is made and entered into as of June 11, 2009 (the “ Effective Date ”) by and between N EUROMED D EVELOPMENT I NC . , a corporation organized and existing under the laws of Barbados (“ Neuromed ”), and M ALLINCKRODT I NC . , a Delaware corporation (the “ Mallinckrodt ”). Each of Neuromed and Mallinckrodt may be referred to in this Agreement individually as a “ Party ”, and collectively as the “ Parties .”

R ECITALS

A. Concurrently with this Agreement, Neuromed and Mallinckrodt are entering into that certain Asset Purchase Agreement between Neuromed and Mallinckrodt (the “ Purchase Agreement ”) pursuant to which Neuromed is selling and assigning to Mallinckrodt, and Mallinckrodt is purchasing from Neuromed, all of Neuromed’s tangible and intangible assets relating to Product (as such term is defined in the Purchase Agreement).

B. In connection with such sale, the Parties desire that Neuromed shall perform, at Mallinckrodt’s cost and expense, certain clinical development and regulatory activities through approval by the FDA of an NDA covering Product, and certain transition services for Mallinckrodt’s benefit in order to facilitate the smooth transition of the Transferred Assets to Mallinckrodt.

The Parties therefore agree as follows:

A GREEMENT

1. D EFINITIONS . The following terms, when used herein with initial capital letters, will have the meanings ascribed to such terms in this Article 1. Capitalized terms used in this Agreement but otherwise not defined herein have the meanings given such terms in the Purchase Agreement.

1.1 “Development” means the conduct of clinical development and regulatory activities relative to Product, through achievement of regulatory approval by the FDA of an NDA filed by Neuromed covering Product, as conducted by Neuromed and in accordance with this Agreement and the Development Plan.

1.2 “Development Costs” means all internal and external costs incurred by Neuromed after the Effective Date for its conduct of Development of Products in accordance with the Development Plan, including any pre-clinical research or development activities, clinical trials, related regulatory activities (including preparing and making regulatory filings) and REMS activities, which Development activities are necessary or useful to seek or obtain regulatory approval by the FDA with respect to Product (or a specific indication for Product) in the Territory. The costs and reasonable expenses of Neuromed employees to the extent actually engaged in Development shall be included in Development Costs at the applicable portion of the FTE Rate, based on the number of days or portion of any days spent by the applicable employee (during any particular time period) in conducting Development.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 promulgated under the Securities Act of 1933, as amended; [*] denotes omissions.

1.3 “Development Plan” means the summary plan for conducting clinical development and regulatory activities, through achievement of regulatory approval by the FDA of a NDA filed by Neuromed covering Product, attached as Appendix A of this Agreement, as such plan may be modified or amended in writing by the Parties.

1.4 “FTE Rate” means, for one full time equivalent employee working for one full-time year (equal to [*]days of work during the year, holidays, vacation and sick-days included), an amount equal to $[*] per such full-time equivalent year of work.

1.5 “Joint Development Committee” or “JDC” means the committee formed by the Parties as provided in Section 2.2.

1.6 “Neuromed Personnel” means all employees, agents, subcontractors, and representatives of Neuromed (or of Neuromed’s Affiliate) who perform any Development or Transition Services under this Agreement, which personnel are listed on Appendix D , attached hereto (which list may be updated from time to time by Neuromed with the consent of Mallinckrodt, such consent not to be unreasonably withheld or delayed).

1.7 “Past Development Costs” means the Reimbursed Development Costs and Assumed Development Cost Liabilities, each as defined in the Purchase Agreement.

1.8 “Transition Services” means the transition services, functions and tasks of Neuromed described in Appendix B of this Agreement, as they may be changed or supplemented during the term of this Agreement pursuant to the terms of this Agreement. If any service, function or responsibility not specifically described in this Agreement is an inherent or necessary part of the performance of the Transition Services, it will be deemed included within the scope of the Transition Services.

1.9 “ Territory ” means the United States and its possessions and territories.

2. P RODUCT D EVELOPMENT AND NDA A PPROVAL

2.1 Neuromed Development Activities. Notwithstanding that Mallinckrodt has purchased the Transferred Assets pursuant to the Purchase Agreement, the Parties agree that Neuromed shall continue to be involved in Development, through NDA Approval, of Product, under the terms of this Agreement. Neuromed shall conduct any Development efforts in accordance with the Development Plan, using Commercially Reasonable Efforts and at Mallinckrodt’s cost and expense as provided herein. Neuromed will be responsible for using Commercially Reasonable Efforts to conduct the Development of Product through obtaining NDA Approval for Product, including the planning, filing and prosecution of the NDA with the FDA, all in accordance with the Development Plan, subject to Section 2.4 below and review of its Development activities by appropriate Mallinckrodt personnel. Neuromed may utilize

2.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 promulgated under the Securities Act of 1933, as amended; [*] denotes omissions.

consultants and contractors (such as CROs) to conduct significant portions of the Development activities under this Section 2.1 (and the costs of such third parties shall be included in the Development Costs reimbursed by Mallinckrodt as provided in Section 2.3 below). Neuromed will use its Commercially Reasonable Efforts to conduct all the tasks and meet on a timely basis all the objectives and milestones under the Development Plan. Neuromed will comply (and cause its Affiliates to comply) with all applicable federal, state and local laws and regulations, and will obtain all applicable Governmental Permits, in connection with its performance of the Development work under this Section. The JDC shall oversee Neuromed’s Development efforts, and Neuromed shall keep the JDC fully informed of all development activities taken and results, including all regulatory actions and communications with the FDA relating to the NDA. Neuromed will provide all services in connection with Development with at least the same level of skill, quality, care, timeliness and cost-effectiveness as such services, functions and tasks were performed by Neuromed and/or its Affiliates internally prior to the Closing Date and in a manner that is reasonably calculated to result in approval of the NDA for Product at the earliest possible date and for the indications covered by the Development Plan. Neuromed will perform, and will cause its Affiliates to perform, the Development in a prompt and professional manner, utilizing appropriately qualified and knowledgeable personnel and all tasks will be performed in accordance with industry standards for services of the type performed.

2.2 Joint Development Committee. Promptly after the Effective Date, the Parties shall form a Joint Development Committee (the “ JDC ” ). The JDC shall (a) oversee Neuromed’s Development of the Product under the Development Plan, (b) act as the forum for Mallinckrodt to provide its input into Development and to keep informed about its progress, and (c) offer its advice to expedite or aid the progress of Development work. The JDC shall be comprised of a total of six (6) appropriately qualified members (or such other even number of members as is agreed to in writing by the Parties), with each of Neuromed and Mallinckrodt designating one half of the total number of members as its representatives. Either Party may replace any of its respective JDC representatives with an appropriately qualified representative at any time with reasonable prior written notice to the other Party. The JDC will meet at least once each month so long as Product is being developed by Neuromed under this Agreement, provided that the JDC may agree from time-to-time to meet at a greater or lesser frequency if appropriate under the circumstances. JDC meetings may be conducted by videoconference, teleconference or in person, as requested by a Party, except that at least one of the meetings per year will be conducted in person. The JDC will agree upon the time and location of the meetings. A Neuromed representative of the JDC will act as the chair, and such chair (or a designee) shall coordinate, prepare and circulate an agenda for each JDC meeting reasonably in advance of the meeting. A reasonable number of additional representatives of a Party may attend meetings of the JDC in a non-voting capacity. The JDC shall seek to reach consensus on matters coming before it, but will not have any authority to decide development matters that are Neuromed’s responsibility under this Agreement. Notwithstanding the preceding provisions of this Section 2.2, Mallinckrodt shall have the right to give its prior written approval for those Development activities or actions set forth and described on Appendix C attached hereto, such approval not to be unreasonably withheld.

3.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 promulgated under the Securities Act of 1933, as amended; [*] denotes omissions.

2.3 Payment of Development Costs. Mallinckrodt shall reimburse Neuromed on a monthly basis for all Development Costs (up to the maximum amount as set forth below) actually incurred by Neuromed in conducting the development of Product under this Agreement through Neuromed obtaining NDA Approval. On a monthly basis and no later than the tenth (10 ^th ) day of each calendar month for so long as this Agreement is in effect with respect to Development, Neuromed shall submit an invoice to Mallinckrodt setting forth the Development Costs incurred in the prior month (accompanied by such detail and supporting documentation as to the percentage of such invoice attributable to work performed in the United States and as to the internal and external costs and expenses, as Mallinckrodt may reasonably request), and Mallinckrodt shall pay each such invoice within thirty (30) days of receipt (provided, that any such amounts paid by Mallinckrodt pursuant to this sentence may be subject to later adjustment pursuant to the audit provisions of Section 5 below). All payments due hereunder will be made in United States dollars and, unless otherwise agreed in writing, will be made by wire transfer to such bank as Neuromed may designate in writing. The maximum amount of reimbursement by Mallinckrodt of Neuromed development costs and expenses under this Section 2.3, combined with any payment by Purchaser for Past Development Costs under and pursuant to the Purchase Agreement, is Sixteen Million Dollars ($16,000,000). At such time as Mallinckrodt has paid such maximum amount of reimbursement to Neuromed, Mallinckrodt shall not be obligated to reimburse Neuromed for any additional Development Costs, and Neuromed shall not be required to continue Development efforts on the Product until such time as Mallinckrodt has given approval for Neuromed’s continued efforts (as contemplated in Section 2.4 below). Neuromed will use good faith, diligent efforts to complete all the tasks covered by the Development Plan within such maximum amount of reimbursement.

2.4 Limitation on Neuromed Development. Neuromed shall not be obligated to conduct Development tasks or efforts beyond those tasks set forth in the Development Plan. If FDA requirements, or other matters, require that development efforts and/or tasks, beyond those set forth in the Development Plan, be undertaken in order to achieve NDA approval for the Product (the “Additional Development Efforts” ), then the JDC shall discuss in good faith and seek to agree on whether Neuromed should conduct such required Additional Development Efforts. If the Parties agree that Neuromed shall undertake any specific Additional Development Efforts, Mallinckrodt and Neuromed shall amend the Development Plan to reflect such Additional Development Efforts, and Mallinckrodt shall reimburse Neuromed for all such Additional Development Efforts undertaken under such amended Development Plan (in accordance with the applicable procedures set forth in Section 2.3 and even if the costs of such efforts exceed the limitation in Section 2.3). If the Parties cannot agree on whether Neuromed shall conduct any particular Additional Development Efforts, then Mallinckrodt may, but shall not be required, to conduct any such Additional Development Efforts needed to obtain NDA Approval.

3. T RANSITION S ERVICES

3.1 Provision of Transition Services . Neuromed will use Commercially Reasonable Efforts to provide, and as necessary will cause its Affiliates to provide, the Transition Services to Mallinckrodt commencing promptly after the Effective Date, as

4.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 promulgated under the Securities Act of 1933, as amended; [*] denotes omissions.

reasonably requested by Mallinckrodt or as needed to transition the Business and the Transferred Assets to Mallinckrodt. Except as otherwise expressly provided in this Agreement, Mallinckrodt will reimburse Neuromed for its reasonable internal and out-of-pocket costs and expenses incurred in providing the Transition Services, based on monthly invoices provided by Neuromed. Neuromed will use Commercially Reasonable Efforts to provide the facilities, personnel and other resources required for performance of the Transition Services.

3.2 General Standards of Performance . Neuromed will provide, and will cause its Affiliates to provide, the Transition Services with at least the same level of skill, quality, care, timeliness and cost-effectiveness as such services, functions and tasks were performed by Neuromed and/or its Affiliates internally prior to the Closing Date and in a manner that would be reasonably expected to enable Mallinckrodt to conduct the Business related to the Transferred Assets after the Closing. Neuromed will perform, and will cause its Affiliates to perform, the Transition Services in a timely and professional manner and in accordance with industry standards for services of the type performed. Neuromed will comply, and will cause its Affiliates to comply, with all applicable Laws and will obtain all applicable Governmental Permits in connection with the performance of the Transition Services under this Agreement.

3.3 Skills, Training, and Experience . Neuromed will ensure that Neuromed Personnel performing Transition Services have sufficient skills, training and experience to enable them to perform the Transition Services with the same level of skill, quality, care, timeliness and cost-effectiveness as similar services, functions and tasks are performed for Neuromed.

3.4 Reduction in Services . Mallinckrodt may elect to suspend or not to receive any of the Transition Services at any time, with or without cause, upon written notice to Neuromed. If Mallinckrodt suspends or elects not to receive a Transition Service, Mallinckrodt will pay to Neuromed all amounts due for such discontinued service prior to the effective date of discontinuance.

3.5 Additional Services . If Mallinckrodt reasonably requests that Neuromed perform additional services not included within the scope of the Transition Services described on Appendix B, then the Parties will promptly negotiate in good faith with a view toward adding such additional services to Schedule B on terms and conditions substantially similar to those set forth in this Agreement.

3.6 Service Fees . In consideration for the Transition Services to be performed by Neuromed, Mallinckrodt shall pay Neuromed internal, at the applicable portion FTE Rate based on the actual amount of time any given individual is engaged in the performance of Transition Services, and external costs incurred by Neuromed in performing the Transition Services, as reflected in monthly invoices to Mallinckrodt. Mallinckrodt shall pay each such invoice within thirty (30) days of receipt. All payments due hereunder will be made in United States dollars and, unless otherwise agreed in writing, will be made by wire transfer to such bank as Neuromed may designate in writing.

5.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 promulgated under the Securities Act of 1933, as amended; [*] denotes omissions.

4. Compensation and Benefits. All Neuromed Personnel performing Development work or providing Transition Services under this Agreement will be deemed to be employees or representatives solely of Neuromed (or its Affiliates) for purposes of all compensation and employee benefits and not to be employees or representatives of Mallinckrodt. Neuromed (or its Affiliates) will be solely responsible for payment of (a) all income, disability, withholding and other employment taxes and (b) all medical benefit premiums, vacation pay, sick pay or other fringe benefits for any employees, agents or contractors of Neuromed who perform any tasks or services hereunder. All Neuromed Personnel will be under the direction, control and supervision of Neuromed, and Neuromed will have the sole right to exercise all authority with respect to the employment, termination, assignment and compensation of such Neuromed Personnel.

5. Audit Rights. Upon at least thirty (30) days prior written notice from Mallinckrodt and not more than twice in each calendar year, Neuromed shall permit, and shall require its Affilia