By Matthew Willett

Elan Corp. is positioning itself for a run at becoming one of the top 100 pharma companies in the world with a $1.8 billion acquisition of Dura Pharmaceuticals Inc., a move that will double the Dublin company's U.S. marketing capability.

With the stock-swap acquisition, still subject to regulatory and Dura shareholder approval, comes a pipeline of products that includes the S2 inhaler; the Spiros inhaler, a delivery system for insulin therapy and other potential applications; and Maxipine, an injectable antibiotic.

Terms of the acquisition call for each Dura share to be exchanged for 0.6715 Elan American Depositary Shares. The deal values Dura at about $35, a 22 percent premium to Dura's Sept. 8 close.

After the Monday announcement, Elan shares slipped about 5 percent, but recovered Tuesday. Elan stock (NYSE:ELN) jumped as investors warmed to the acquisition, rising $5.06 to close Tuesday at $54. Dura stock (NASDAQ: DURA) also jumped about 10 percent, rising $3.375 to close at $35.

Elan spokesman Max Gershenoff said the move is part of the company's steady expansion to big-pharma status begun in the mid-1990's.

"Ten years ago, Elan was still a drug-delivery company," he said. "Until this year we were a specialty pharmaceutical company focused on neurotherapies and pain management: brain and pain. This year saw the move into new areas. With the acquisition of The Liposome Co. the company moved into oncology and antifungals, and now with Dura we've moved into infectious disease treatment and respiratory conditions."

Elan's May acquisition of The Liposome Co., worth about $575 million, represented the company's first step this year toward its goal, he said. Just days later the company announced it had completed the acquisition of Segix Italia, a Glaxo Wellcome spin-off with 1999 product sales of $25 million.

And Elan stands poised to strike at big pharma with its own pipeline as well, preparing to launch its pain therapeutics ziconotide, Myobloc and Migaurd, the latter with indication for migraine headaches.

With the Dura purchase, Gershenoff said, comes a hospital-based sales force 500 people strong. He said it's likely the company will continue its drive with further acquisitions.

"While we're developing an organic potential in our ongoing Alzheimer's vaccine research, we're also very interested in acquiring companies that help grow our business, both in the U.S. and in Europe. You can expect to see those things happening in the foreseeable future," he said.

Merrill Lynch First Vice President Stephen Tighe said in a report Tuesday his company likes the buy, and added that the acquisition will strengthen Elan's sales and marketing U.S. infrastructure and add depth to the company's product portfolio.

"We believe that the stock's recent weakness presents a particularly good buying opportunity. We expect investors to warm up to the acquisition as the financial and strategic details become more visible," Tighe said. "We believe this deal makes sense."

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