By Frances Bishopp

ViroPharma Inc., which develops drugs to fight RNA viruses, has priced its public offering of 2 million shares of its common stock at $13.75 per share, which will raise $27.5 million for the Malvern, Pa.-based company.

The offering has an overallotment option of 300,000 shares. Underwriters are J.P. Morgan & Co. and Cowen & Co., both of New York, who underwrote ViroPharma's disappointing initial public offering (IPO) last fall.

When ViroPharma registered for its IPO in late September, it proposed selling 2.25 million shares between $11 and $13 per share. Based on a mid-range price of $12, the offering was expected to raise $27 million.

Instead, the IPO was priced at $7 per share, generating gross proceeds of $15.75 million. Total IPO proceeds including overallotments were $18.1 million.

As a result, the company revised projections about its operations, saying it had enough cash to support programs through early 1998. The original IPO price range was expected to generate funding through mid-1998.

ViroPharma will have a total of 11,148,911 shares of common stock outstanding, not including the overallotment. The company, which was founded in 1994, had a net loss for 1996 of approximately $6.4 million.

ViroPharma's stock (NASDAQ:VPHM) closed Thursday at $15, down $0.250.

RNA viruses are responsible for most human viral infections and grow by replicating RNA, a process different from the survival cycles of DNA viruses, retroviruses and cells.

The viral activities involved in this replication process are unique to RNA viruses, yet universal among all RNA viruses.

Therefore, technologies used for the development of inhibitors of this process have the potential applicability to a broad range of diseases caused by RNA viruses, such as the common cold, influenza, hepatitis C, viral meningitis and viral pneumonia. The company's small molecule compounds are designed to block enzymes essential for the virus' replication.

ViroPharma's most advanced product is pleconaril, a broad-spectrum, antiviral compound currently being developed for treatment of four RNA virus diseases. In June 1996, ViroPharma completed a Phase IIa challenge study in summer flu with pleconaril in which all evaluated disease measures were significantly reduced in treated subjects.

In June 1997, the company completed a Phase IIb clinical study for viral meningitis that demonstrated pleconaril significantly reduced disease duration, the trial's primary endpoint. This Phase IIb trial has been extended into the U.S. and Canada.

No serious adverse events attributable to pleconaril have been observed in the 139 participants in the clinical trial conducted to date.

In March 1997, ViroPharma began Phase II clinical trials of pleconaril for hand-foot-and-mouth disease in children.

ViroPharma will use a portion of the proceeds from the offering to develop pleconaril for multiple disease indications, including adult and pediatric viral meningitis, enterovirus respiratory disease (summer flu), hand-foot-and-mouth disease, myocarditis, perinatal enteroviral disease and the common cold.

The proceeds also will be used for premarketing activities related to pleconaril and advancement of preclinical development candidates for influenza, hepatitis C and viral pneumonia.

ViroPharma has collaborative agreements with Boehringer Ingelheim, of Ingelheim, Germany, for hepatitis C, 3-Dimensional Pharmaceuticals Inc., of Exton, Pa., for computer-generated chemical compound libraries, and Sanofi SA, of Paris. The company licensed from Sanofi the rights to develop and market pleconaril in the U.S. and Canada.

ViroPharma's cash and cash equivalents, as of March 31, 1997, were at $7.7 million. Total current assets were $21.6 million as of March 31, 1997. *