Shire's shopping spree continues with a $245M deal to buy PhIII-ready Meritage

Fresh from completing a $5 billion deal for NPS Pharma, Shire ($SHPG) stopped to bag a small San Diego biotech, picking up Meritage Pharma and a Phase III-ready rare disease drug for $70 million upfront. While Shire didn't spell out the milestones attached, the deal was delivered through last year's acquisition of ViroPharma, which agreed to pay up to $175 million for clinical and regulatory advancements when it bagged an option for the West Coast biotech. 

That original 2011 deal was spelled out in a set of consolidated financial statements for ViroPharma.

Meritage gives Shire the opportunity to both add to its late-stage pipeline while also beefing up its portfolio of rare disease drugs. The biotech has been developing oral budesonide suspension for eosinophilic esophagitis, a rare inflammatory gastrointestinal disease. ViroPharma acquired an option to buy the company in a $7.5 million deal back in 2011.

Budesonide, a glucocorticoid steroid used to treat asthma and other conditions, is an old and well understood drug. Meritage developed a viscous oral formulation of the drug so it can coat the esophagus and treat the GI ailment.

Shire came out of its broken AbbVie ($ABBV) relationship with more than $13 billion in the bank to fuel an M&A spree. And with Shire CEO Flemming Ornskov determined to bulk up the company to rival big players like Biogen Idec ($BIIB), buyouts remain a preferred short-term strategy. Ornskov has already acquired more than a half-dozen companies in his two-year tenure at the helm. Looking at its two most recent deals for NPS and Meritage, it's clear that Shire's appetite for growth requires regular feeding.

Analysts will be looking past today's deal to a bigger set of targets, speculating on the chances of a bid for a company like Ultragenyx ($RARE) or even BioMarin ($BMRN) or Vertex ($VRTX).

Meritage CEO Elaine Phillips

"Meritage has worked closely with gastroenterologists, patients and their caregivers to develop Oral Budesonide Suspension, which was the first medication to significantly reduce eosinophilic inflammation and related symptom endpoints in patients with eosinophilic esophagitis in a Phase II clinical trial," says Meritage CEO Elaine Phillips in a statement. "The acquisition of Meritage by Shire, a global biotechnology company with GI and rare disease expertise, may benefit physicians and patients by helping develop OBS to potentially become the first approved treatment in the U.S. indicated for this often disabling disease."

- here's the release

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