VANCOUVER - Biotechnology firm QLT Inc. (TSX:QLT) says its deal to merge with Auxilium Pharmaceuticals, Inc. is expected to go ahead, even though the U.S.-based suitor is now the subject of an unsolicited takeover.

Vancouver-based QLT says Auxilium has advised it that its board of directors hasn't changed or withdrawn its recommendation on the merger. Auxilium has an unsolicited offer from Dublin-based Endo International pharmaceutical company for about US$1.41 billion.

In late June, QLT and Auxilium announced they had signed an all-stock deal 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.

Under the deal, the combined company will be led by Auxilium's 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 but sales of the drug later collapsed.

The company has been selling off its products, including Visudyne, sold to 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.

"QLT's board of directors reaffirms its support for the merger with Auxilium pursuant to the merger agreement and believes that such a transaction continues to be in the best interests of QLT," the Vancouver company said in a statement on Wednesday.

QLT also says it has agreed to Auxilium's adoption of a shareholders right plan in response to the Endo takeover. Shareholder rights plans _ also known as poison pill defences _ make an acquisition by a hostile bidder prohibitively expensive by increasing the number of shares a company has by allowing shareholders to purchase additional shares at a substantial discount to the market price.

Shares in QLT were down 96 cents, or 14 per cent, to $5.89 in late morning trading on the Toronto Stock Exchange.

News from © The Canadian Press, 2014