DUBLIN, Ireland - Elan Corp. (NYSE:ELN) has clocked up its second acquisition in two weeks. The Dublin-based company is merging with Neurex Corp. (NASDAQ:NXCO), of Menlo Park, Calif., a late-stage biopharmaceutical company that develops drugs for pain management and acute care.

The tax-free, all-stock transaction is valued at US$700 million, based on Elan's share price of US$62.38 at the close of trading on April 28. This deal follows Elan's US$150 million purchase of Carnrick Laboratories, of Cedar Knolls, N.J., which it announced two weeks ago. (See BioWorld International, April 29, 1998, p. 1.)

The Neurex deal, expected to close during the third quarter, is Elan's biggest ever in numerical terms, said company CEO Donal Geaney. However, its merger with South San Francisco-based Athena Neurosciences Inc. two years ago was, in relative terms, twice as large, he said. Elan is still on track to attain its goal of becoming a US$1 billion company by 2001, according to Geaney. But, he added, he is “prepared to have a bigger target for 2002.“ The takeover will result in a five percent reduction in net earnings this year and next, but Elan expects it to make a positive contribution to the bottom line from 2000.

Neurex's shareholders will receive 0.51 of an Elan American Depositary Share in return for each common share of Neurex. This values Neurex shares at US$31.81, which represents a considerable premium on the closing price of US$19.75 on April 28 (the day before the deal was announced). The share price rose sharply during the following day to close at US$29.44. Neurex's shareholders will own around 11 percent of Elan's stock when the deal is completed, at which point Elan will be capitalized at approximately US$7.5 billion, Geaney said.

Elan still has plenty of cash for further acquisitions, according to Geaney, but the company is not engaged in any other negotiations at present. It held US$567.5 million in cash and marketable securities at the end of the first quarter.

Neurex, which was established in 1986, released its first commercial product, Corlopam (fenoldopam mesylate), in January. The drug, which is for treatment of severe hypertension in the hospital setting, racked up US$2.1 million in sales during the first quarter, and is potentially worth up to US$90 million in annual sales, Geaney said.

Snail, Tarantula Drugs In Development

Neurex ended the first quarter with more than US$46 million in cash, according to a recent company statement, having reported a net loss of US$10.6 million on revenues of US$2.4 million. It is developing synthetic peptides based on neuronal calcium channel blockers. It expects to file for a new drug application this year for Ziconotide for treatment of neuropathic and malignant pain.

Ziconotide was derived from the venom of a Conus snail. About 500 species of Conus have been described, each of which secretes a mixture of short peptide neurotoxins that disable its prey. The compound is a potent and selective blocker of N-type calcium channels, according to Neurex. It is undergoing Phase III trials in partnership with Warner-Lambert Co., of Morris Plains, N.J., for head trauma and other ischemic conditions.

Neurex also is developing a compound known as SNX-482, which it isolated from the venom of the African tarantula, Hysterocrates gigas. SNX-482, according to Neurex, is the first potent and selective inhibitor of R-type calcium channels, which are thought to play a role in brain function. *

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