Alchemia Limited and Meditech Research Limited announced a proposal to merge by way of an off-market takeover bid by Alchemia for Meditech.

According to the company release, the merger proposal has the unanimous support of the Meditech Board, which intends to recommend the offer to Meditech shareholders in the absence of a superior proposal. All the Directors of Meditech who hold Meditech shares or options will accept Alchemia's offer in respect of their shareholdings and option holdings in the absence of a superior proposal.

Alchemia Chief Executive Officer, Tracie Ramsdale, said the combined group would have exceptional people, a high quality product pipeline and innovative technology.

"The Alchemia Board believes Meditech will be an excellent addition to Alchemia's growing drug development and discovery portfolio," Ramsdale said adding, "Meditech has a product in Phase II clinical trials in metastatic colorectal cancer patients and two anti-cancer products that have satisfactorily completed phase I trials. These products complement Alchemia's early and late stage revenue generating opportunities. Meditech's products are based on an advanced technology that is applied to improve existing approved anticancer agents, thereby potentially accelerating the development pathway."

Meditech's products complement Alchemia by filling out its product pipeline. Meditech's assets in clinical trials are at an earlier stage of development than Alchemia's Synthetic Heparin but are significantly more advanced than Alchemia's other drug discovery opportunities, the release stated.

The merger brings together two companies with technology platforms based on carbohydrates. The chemistry expertise of Alchemia complements the biology expertise of Meditech. Meditech has strong preclinical and clinical expertise which will accelerate the development of Alchemia's drug discovery opportunities.

In addition to its scientific and management strengths, the combined company will have an attractive pipeline consisting of Synthetic Heparin, one drug candidate in Phase II clinical trials, two candidates that have completed Phase I trials and another that is planned to commence Phase I trials at the end of 2006.