Canadian firm YM BioSciences Inc. agreed to purchase Eximias Pharmaceutical Corp. in a cash and stock transaction to establish a U.S.-based subsidiary.

Full financial terms were not disclosed, but YM said that at least $25 million of the merger consideration would consist of company shares. In exchange, YM gains Eximias' cash resources of more than $30 million and a portfolio of two clinical-stage cancer drugs.

"It's a good combination of management team, cash and oncology assets," said Gail Schulze, president and CEO of privately held Eximias, adding that more details, including development priorities for the combined company's cancer drug portfolio, will be released at a later date.

The companies expect to update investors during a conference call following the closing of the merger, expected early next month.

At the completion of the transaction, Eximias, based in Berwyn, Pa., will begin operating as YM BioSciences USA Inc., with Schulze staying on as CEO of the U.S. subsidiary. She also will become president of the combined company and be added to YM's board. Other senior members of Eximias' management team are expected to be integrated into YM's expanded leadership.

Founded in early 1998 under the name Zarix Inc., Eximias licensed its first compound a short time later, acquiring Thymitaq, a thymidylate synthase inhibitor in late-stage development, from La Jolla, Calif.-based Agouron Pharmaceuticals Inc. But development hit a snag last summer when the compound missed its endpoint in a pivotal study in patients with liver cancer.

That 446-patient trial, evaluating intravenously administered Thymitaq in comparison with doxorubicin in inoperable primary liver cancer, failed to show a statistically significant improvement in survival. (See BioWorld Today, Aug. 4, 2005.)

Thymitaq also has been investigated in other cancers, including colon, lung, head and neck and pancreatic, and Eximias has an oral thymidylate synthase inhibitor, Orataq, that has completed some early clinical work against various cancers. At this time, however, the company has no active clinical trials, Schulze said.

YM, which focuses on licensing and developing oncology products, has several in the clinic, starting with its lead candidate, tesmilifene, which completed enrollment last fall for a 700-patient Phase III study in breast cancer. That trial is evaluating the use of tesmilifene, a small-molecule chemopotentiator, plus anthracycline chemotherapy vs. anthracycline chemotherapy alone with a primary endpoint of survival.

The company recently agreed to collaborate with Paris-based Sanofi-Aventis Group to test tesmilifene plus Taxotere (docetaxel) in women with rapidly progressing metastatic breast cancer. It hopes to have data from a 39-patient trial by the end of 2007.

Behind tesmilifene, Mississauga, Ontario-based YM has an anti-EGFr monoclonal antibody, TheraCIM (nimotuzumab), which is in Phase I/II testing in non-small-cell lung cancer in combination with radiation, and Norelin, a Phase II-stage therapeutic vaccine designed to stimulate antibody production against gonadotropin-releasing hormone to treat sex hormone-dependent cancers.

AeroLEF, a product aimed at treating acute and breakthrough pain, is in a Phase IIb trial expected to enroll 120 patients in a postsurgical setting. AeroLEF is an inhalation delivered formulation of fentanyl. YM gained rights to the product through its May 2005 acquisition of privately held Delex Therapeutics Inc., of Mississauga, Ontario, in a stock transaction.

YM posted a net loss of C$5.5 million (US$4.8 million) for the quarter ending Dec. 31. At that time, the company had cash and cash equivalents of about C$20.3 million, though it added $40 million in February through a registered direct offering of about 9.5 million shares of its stock priced at $4.25 each. (See BioWorld Today, Feb. 15, 2006.)

The acquisition has been approved by both companies' boards. Approval by YM shareholders is not required.