A California pharmaceutical developer will seek to have its legal domicile moved from Delaware to Bermuda to take advantage of a better tax climate for future earnings.

The company, XOMA Corp., said yesterday that its board of directors agreed to the proposed change, made in anticipation of possible future approvals and commercialisation of Neuprex and other products.

Neuprex is expected to be used in two specific medical problem areas, including the prevention of pulmonary complications, such as pneumonia, in patients suffering severe blood loss from traumatic injuries.

It is also being tested in the treatment of meningococcemia, a deadly paediatric bacterial infection.

The firm said the move to Bermuda will allow XOMA to take advantage of certain tax and other benefits not available under its current corporate structure.

The transaction will be tax free to company stockholders, and is expected to have little or no tax cost to the company. It will have no impact on XOMA's west coast operations in Berkeley and Santa Monica.

XOMA's chairman, president and CEO Jack Castello, said: "If we succeed with Neuprex, we anticipate a significant portion of our future revenue will originate outside the United States.

"Therefore, we believe that establishing an appropriate corporate structure now may significantly reduce our long-term effective income tax rate and provide other benefits, such as facilitating collaborations and partnerships.

"At the same time, we have an unusual combination of financial circumstances that lets us implement this change with little or no tax cost to the company, and none to our stockholders.'' The proposal must be approved by the holders of a majority of the shares of XOMA common stock.

Details will be explained in a proxy statement/prospectus and other materials to be filed with the US Securities and Exchange Commission and mailed to stockholders.

The Nasdaq-listed company (Nasdaq: XOMA) develops and manufactures protein, peptide and monoclonal antibody pharmaceuticals.

The Company's medical targets include bacterial and fungal infections, infectious complications (such as those following traumatic injury or surgery) and immunologic disorders.

XOMA's primary drug development platform is BPI (bactericidal/permeability-increasing protein), a protein found in human white blood cells that has multiple anti-infective properties.