ViroPharma to acquire Meritage

Dec 23 2011

ViroPharma Incorporated (NASDAQ: VPHM) today announced that it has entered into an exclusive option to acquire Meritage Pharma, Inc., a private company based in San Diego, CA focused on developing oral budesonide suspension (OBS) as a treatment for eosinophilic esophagitis (EoE), a chronic inflammatory disorder of the esophagus.

ViroPharma has paid an initial $7.5 million, and has agreed to provide Meritage up to an additional $12.5 million for the development and exclusive right to purchase the company at predefined terms upon the completion of a series of clinical and regulatory deliverables. Meritage will utilize the funding to conduct additional Phase 2 clinical assessment of OBS. After receipt of final Phase 2 data and concurrence with the U.S. Food and Drug Administration (FDA) on an acceptable clinical endpoint for the Phase 3 program, ViroPharma will have an option to acquire Meritage at ViroPharma's discretion for $69.9 million plus the potential for additional payments upon the achievement of certain clinical and regulatory milestones.

As described below, in an initial Phase 2 dose-ranging clinical trial in pediatric patients with EoE, OBS demonstrated a statistically significant reduction of esophageal eosinophilia. Clinical symptom assessment was confounded by the use of a multi-symptom assessment tool and high placebo response.

EoE is a newly recognized chronic disease that is increasingly being diagnosed in children and adults. It is characterized by inflammation and accumulation of a specific type of immune cell, called an eosinophil, in the esophagus. EoE patients may have persistent or relapsing symptoms, which include dysphagia (difficulty in swallowing), nausea, stomach pain, chest pain, heartburn, loss of weight and food impaction.

"Our interest in Meritage is consistent with ViroPharma's intent to broaden our portfolio of development opportunities for rare and serious unmet medical needs," commented Vincent Milano, ViroPharma's president and chief executive officer. "Eosinophilic esophagitis is an emerging, rare condition that currently has no approved therapy. This disease profoundly affects the lives of these patients, causing stomach and chest pain and affecting their ability to swallow and eat normally. Over time, this disease can lead to malnutrition, significant weight loss, and potentially esophageal damage. We look forward to working with Meritage to advance the development of oral budesonide suspension toward the goal of one day providing a solution to treat this debilitating disease."

"We look forward to collaborating with ViroPharma to develop OBS to treat this serious disease," added Elaine Phillips, president and chief executive officer, Meritage. "Our goal is to ensure that this therapy is available for EoE patients and their caregivers as soon as possible."

Oral budesonide suspension was granted Orphan Drug Designation by the FDA in June of 2011 for the treatment of patients with eosinophilic esophagitis. Orphan drug designation entitles the developer to seven years of market exclusivity in the United States upon FDA approval of oral budesonide, provided that the company continues to meet certain conditions established by the FDA. Other potential advantages of Orphan Drug Designation include protocol assistance, the potential for priority review, tax credits, and other financial incentives.