Elan Corp. plc's more than $600 million takeover Monday of AthenaNeurosciences Inc. will help the latter continue its clinicaldevelopment projects, which include a potentially significanttreatment for multiple sclerosis.
The merger was "not a survival issue" for Athena, said DavidWebber, analyst with Stover & Associates LLC, of Stamford, Conn."The issue was whether Athena could keep its research programsgoing. It could have remained independent. For Athena, this producesa corporate critical mass to carry on clinical development programs."
Webber said the more than 20 percent premium paid by Elan, ofAthlone, Ireland, in its stock swap for Athena's 33 million sharesreflects the South San Francisco company's secure cash position andstrong product pipeline.
The merger agreement, swapping .295 Elan American DepositoryShares for each Athena share, valued Athena's stock at $18.25 pershare, 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 wasreached, will issue 9.74 million shares to Athena stockholders. Theacquisition, expected to be complete this summer, was valued at atotal 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 pershare, on revenues of $192 million _ is primarily a drug deliverycompany using its technology to enhance effectiveness ofpharmaceutical products. The Athena acquisition boosts Elan'spresence in the U.S. market and enhances its drug discovery research.
The merger, Webber observed, "creates a very interesting businessentity."
In February 1996 Elan added another element to its researchoperations in an agreement with Cytogen Corp., of Princeton, N.J.The deal gave Elan access to the latter's genetic diversity library ofpeptides 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 (tizanidinehydrochloride) for treatment of spasticity associated with multiplesclerosis and spinal chord injuries.
Athena, after failing to win FDA marketing clearance last year,received an approvable letter from the agency March 11, 1996, andanticipates a product launch later this year. Final FDA approval ofZanaflex is expected to follow resolution of labeling details and plansfor 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 andDiastat are conventional pharmaceuticals.
Webber said one of Athena's most significant biotech-related drugcandidates is Antegren, a humanized monoclonal antibody fortreatment of disease flare-ups in multiple sclerosis patients. The drugis 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 bethe anticipated expiration this year of the company's long-termcollaboration with Eli Lilly & Co., of Indianapolis, for Alzheimer'sdisease treatments. Athena, which has been working with Lilly since1988, wanted to renegotiate the financial terms of the relationship.
Athena also has a drug discovery alliance with Wyeth-AyerstLaboratories, a subsidiary of Madison, N.J.-based American HomeProducts Corp., to develop drugs that block white blood cells frommigrating to the brain for treatment of immune system disorders andinflammatory diseases. In July 1995, Athena received $9.4 millionfrom Wyeth-Ayerst to extend the agreement. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.