Elan Corp. plc's more than $600 million takeover Monday of Athena Neurosciences Inc. will help the latter continue its clinical development projects, which include a potentially significant treatment for multiple sclerosis.

The merger was "not a survival issue" for Athena, said David Webber, analyst with Stover & Associates LLC, of Stamford, Conn. "The issue was whether Athena could keep its research programs going. It could have remained independent. For Athena, this produces a corporate critical mass to carry on clinical development programs."

Webber said the more than 20 percent premium paid by Elan, of Athlone, Ireland, in its stock swap for Athena's 33 million shares reflects the South San Francisco company's secure cash position and strong product pipeline.

The merger agreement, swapping .295 Elan American Depository Shares for each Athena share, valued Athena's stock at $18.25 per share, which was $3.13 higher than the stock's closing price Friday of $15.12. (See BioWorld Today Special News Bulletin, March 18, 1996.)

Elan, whose shares were trading at $61 Friday when the deal was reached, will issue 9.74 million shares to Athena stockholders. The acquisition, expected to be complete this summer, was valued at a total of about $635 million.

Athena's stock (NASDAQ:ATHN) ended Monday up $2.12 to $17.25 and Elan's (NYSE:ELN) closed at $60.50, down $1.25.

Elan _ whose 1995 net income was $67.5 million, or $1.19 per share, on revenues of $192 million _ is primarily a drug delivery company using its technology to enhance effectiveness of pharmaceutical products. The Athena acquisition boosts Elan's presence in the U.S. market and enhances its drug discovery research.

The merger, Webber observed, "creates a very interesting business entity."

In February 1996 Elan added another element to its research operations in an agreement with Cytogen Corp., of Princeton, N.J. The deal gave Elan access to the latter's genetic diversity library of peptides to mimic the function of natural proteins.

Athena, which has a diagnostics unit and a generic drug business, focuses on development of therapeutics for neurological disorders, such as multiple sclerosis and Alzheimer's and Parkinson's diseases.

Among products Elan receives in the takeover is Zanaflex (tizanidine hydrochloride) for treatment of spasticity associated with multiple sclerosis and spinal chord injuries.

Athena, after failing to win FDA marketing clearance last year, received an approvable letter from the agency March 11, 1996, and anticipates a product launch later this year. Final FDA approval of Zanaflex is expected to follow resolution of labeling details and plans for collection of post-marketing data.

Athena also has a new drug application filed for Diastat (diazepam) for acute repetitive seizures in epileptic patients. Both Zanaflex and Diastat are conventional pharmaceuticals.

Webber said one of Athena's most significant biotech-related drug candidates is Antegren, a humanized monoclonal antibody for treatment of disease flare-ups in multiple sclerosis patients. The drug is in Phase II studies and if successful could represent $200 million to $400 million in annual sales.

Another incentive for Athena's merger, Webber suggested, may be the anticipated expiration this year of the company's long-term collaboration with Eli Lilly & Co., of Indianapolis, for Alzheimer's disease treatments. Athena, which has been working with Lilly since 1988, wanted to renegotiate the financial terms of the relationship.

Athena also has a drug discovery alliance with Wyeth-Ayerst Laboratories, a subsidiary of Madison, N.J.-based American Home Products Corp., to develop drugs that block white blood cells from migrating to the brain for treatment of immune system disorders and inflammatory diseases. In July 1995, Athena received $9.4 million from Wyeth-Ayerst to extend the agreement. n

-- Charles Craig Staff Writer

(c) 1997 American Health Consultants. All rights reserved.