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B.C.-based biotech QLT merges with Auxilium
By The Canadian Press
VANCOUVER - Biotechnology firm QLT Inc. (TSX:QLT) has signed a deal to merge with U.S.-based Auxilium Pharmaceuticals under an agreement that will see shareholders of the Canadian company owning about one quarter of the combined firm.
Under the agreement, shareholders of Auxilium will receive 3.1359 QLT shares for each Auxilium share, subject to certain adjustments.
QLT shares were up 86 cents or about 15 per cent at $6.66 in trading on the Toronto Stock Exchange on Thursday, while Auxilium shares were down seven cents at US$21.16 on the Nasdaq market.
The combined organization will be led by Auxilium's current leadership team and will maintain Auxilium's current offices in Chesterbrook, Penn.
Visudyne, a treatment for a common form of age-related blindness, helped make QLT one of Canada's most successful biotechnology companies. However, sales of the drug collapsed after the introduction of Genentech's Lucentis and rising off-label use of cancer treatment Avastin.
Since then, the company has been selling off its products including Visudyne, which was bought by Valeant Pharmaceuticals International Inc. (TSX:VRX), and returning much of the proceeds to shareholders.
Auxilium Pharmaceuticals has a portfolio of 12 approved products including treatments for erectile dysfunction.
Auxilium chief executive Adrian Adams said the combined company will be more competitive and efficient.
"Building on Auxilium's strong foundation and commercial expertise, the merger with QLT represents a unique opportunity to accelerate our desired strategic transformation into a leading, diversified North American specialty biopharmaceutical company," Adams said.
QLT has a synthetic retinoid program under development for the treatment of retinal diseases.
"We believe that this is an excellent transaction for QLT shareholders and provides them with the opportunity to benefit from the potential upside of the combined company," QLT chairman Jason Aryeh said in a statement.
The deal, which has been unanimously approved by the boards of both companies, is subject to several conditions, including regulatory approvals in the U.S. and Canada, and approval of both companies' shareholders.
Shareholders representing roughly 32 per cent of QLT shares outstanding have agreed to vote in favour of the transaction.
The deal is expected to close in the fourth quarter.
RBC Capital markets analyst Douglas Miehm said he doesn't expected any regulatory pushback on the transaction and said it creates a "more tax efficient" Canadian corporation.
"We do not believe the regulators will find any anti-competitive or other issues with the transaction since QLT has no revenue generating assets," he wrote in a note to clients.