Auxilium Pharmaceuticals, Inc. of Chesterbrook has merged with QLT, Inc. of Vancouver, British Columbia.

QLT is a biotechnology company focused on developing innovative ophthalmology products to treat rare diseases. Under the terms of the agreement, a wholly-owned subsidiary of QLT will be merged with and into Auxilium. QLT will remain incorporated in British Columbia, Canada, and will be renamed “New Auxilium.”

Current shareholders of Auxilium will receive 3.1359 QLT shares for each Auxilium share, subject to certain adjustments. For QLT shareholders, the transaction represents a 25 percent premium based on a calculation of the closing NASDAQ stock prices of Auxilium and QLT on June 25.

Auxilium shareholders will own approximately 76 percent of the combined entity on a fully diluted basis, and current QLT shareholders will own approximately 24 percent.

“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, said Adrian Adams, chief executive officer and president of Auxilium. “We are creating what we believe is a more competitive and efficient platform to capitalize on greater market opportunities and position Auxilium to deliver meaningful value for shareholders while enhancing our ability to invest in and offer innovative products that make a difference in the lives of underserved patients.”

On June 2 Auxilium announced the departure of its chief financial officer and reduced its financial guidance for 2014 due to lower-than-expected revenues from Testim testosterone gel due to the shrinking testosterone gel market following questions about potential health risks.

Adams said the merger will put Auxilium in a strong financial position to build on its strength in men’s healthcare and enable expansion into new specialty therapeutic focus areas. The companies also intend to continue to pursue a potential partnering agreement for QLT’s late-stage retinoid program.

“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,” said Jason Aryeh, chairman of QLT.

The combined organization will be led by Auxilium’s current leadership team who will maintain Auxilium’s current offices in Chesterbrook. All current Auxilium directors are expected to join the merged company’s board, joined by two current QLT directors. Auxilium does not expect any material changes to its current U.S. operations or employment as a result of this transaction, and expects to grow its presence in both the U.S. and Canada.

Shares of the combined company are expected to trade on NASDAQ and QLT will be delisted from the Toronto Stock Exchange.