DUBLIN, Ireland — Elan Corp. (NYSE:ELN) has raised US$50 million in a private placing to fund a new drug discovery vehicle, Neuralab Ltd., which will focus on therapies for Alzheimer's disease.

Neuralab will use most of the cash to fund payments to Elan, which will conduct the research on Neuralab's behalf through its San Francisco subsidiary, Athena Neurosciences Inc. "That's where the expertise resides," said Elan's CEO and chairman, Donal Geaney.

The Neuralab initiative is similar to another drug development vehicle, Axogen, which Dublin-based Elan established in 1996 to fast track the development of multiple sclerosis and cervical dystonia drug candidates. (See BioWorld International, Nov. 13, 1996, p.1.)

Elan has three ongoing Alzheimer's programs that Neuralab will support, said Geaney. These cover the areas of beta amyloid aggregation, inflammation and neurotoxicity, and cleavage of beta-amyloid precursor protein by beta-secretase.

However, Neuralab will not become involved in Elan's Alzheimer's alliance with Eli Lilly and Co., of Indianapolis. This 10-year-old partnership, which is due to wind up on Aug. 13 this year, is developing compounds that reduce the production of beta-amyloid peptide, a major component of the brain plaques associated with Alzheimer's. Geaney said he would be happy to renew this alliance, but hopes that it will not be necessary. He expects the lead compounds generated by the partners will be ready to enter further development by then.

U.S. institutions are Neuralab's principal investors, said Geaney. According to an Elan statement, the deal comprised an offering of 1.25 million units, each consisting of one common share of Neuralab and two warrants to purchase American Depositary Receipts of Elan, one at US$65.01 and the other at a rate to be determined by future trading prices. The warrants cannot be exercised for two years and expire after five.

Donaldson, Lufkin & Jenrette, of New York, acted as Neuralab's placement agent.

Elan also reported its fiscal 1997 results last week. Net earnings were US$175.1 million, with diluted earnings per share of US$1.58, up 29 percent from US$115.9 million for the 1996 calendar year (Elan altered its reporting timetable at the beginning of 1997), with diluted earnings per share of US$1.26. The 1996 figures exclude a one-time charge associated with Elan's acquisition of Athena Neurosciences.

Athena contributed around US$100 million to Elan's US$389.2 million 1997 revenues, said Geaney. Athena began to show a profit toward the end of the year, but its performance over the period as a whole had a neutral effect on earnings. It will have a positive impact on earnings in the current year, he said.