Shire has acquired Meritage Pharma, a global, privately held company, for $70 million upfront and additional contingent payments based on development and regulatory milestones.

With the acquisition, Shire has acquired the global rights to—and undertaken the further development of—Meritage’s phase III-ready compound, Oral Budesonide Suspension (OBS), for the treatment of adolescents and adults with eosinophilic esophagitis (EoE), a rare, chronic inflammatory gastrointestinal (GI) disease.

This acquisition further enhances Shire’s late-stage pipeline and builds upon the company’s rare disease and GI commercial infrastructure and experience. Shire does not expect this acquisition to result in a change to its previously published earnings guidance for 2015. Shire obtained the rights to acquire Meritage in connection with its acquisition of ViroPharma in 2014.

Shire’s head of R&D, Philip J. Vickers, Ph.D., said, “Shire’s pipeline and strategic focus on rare diseases is further strengthened with the acquisition of Meritage, which also complements our strong GI capabilities. Adding this phase III-ready compound to our late-stage portfolio will allow us to leverage our expertise to further develop this important therapy that, if approved, will give hope to patients living with eosinophilic esophagitis.”

Meritage’s president and CEO, Elaine Phillips, Ph.D., said, “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. 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.”

EoE is a chronic disease that increasingly is being diagnosed in children and adults, with an estimated prevalence in the U.S. of 181,000. 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 related to esophageal dysfunction, which include dysphagia (difficulty swallowing) and food impaction.

OBS is a proprietary viscous oral formulation of budesonide that is designed to coat the esophagus where the drug can act locally. Budesonide is the active pharmaceutical ingredient in several products approved by the FDA, including products for the treatment of asthma, allergic rhinitis, ulcerative colitis and Crohn’s disease. Budesonide is a corticosteroid and has an established safety profile in those diseases. The FDA has granted Orphan Drug designation to OBS for the treatment of patients with EoE.