EXTON, Pa. and SAN DIEGO, Dec. 22, 2011 /PRNewswire/ -- 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 V