Shire PLC acquires Advanced BioHealing for $750M

Creation of new strategic platform based on tissue regeneration using cell-based therapies complements Shire\'s existing specialist physician focus and biologics manufacturing capability

Lloyd Dunlap
DUBLIN, Ireland—Shire PLC has signed an agreement to acquireAdvanced BioHealing Inc. in a straight cash deal, subject to customaryconditions, including obtaining antitrust clearances.
 
The new entity combines Advanced BioHealing's experience andcommercial capability in regenerative medicine with Shire's strengths andexpertise in human cell biological manufacturing. In announcing thetransaction, Shire cites ABH's strong strategic fit with Shire, the largelyunmet medical need for a symptomatic condition in a growing and underpenetratedmarket served by specialist physicians and global market access to the leadingU.S. marketed product for diabetic foot ulcers (DFU).
 
In addition, the product was attractive to Shire due to itshigh regulatory, development and manufacturing hurdles for potentialcompetitors. Finally, the acquisition provides a platform for acquiringadditional regenerative medicine assets.
 
 
The purchase price of $750 million in cash will be financedfrom Shire's existing cash resources. With the acquisition, Shire will own theglobal rights for DERMAGRAFT and will continue to invest in the development ofnew indications and new geographies, pending regulatory approvals.
 
 
DERMAGRAFT is a regenerative bioengineered skin substituteindicated for use in the treatment of diabetic foot ulcers (DFU) greater thansix weeks old. The product now commands about a 5 percent patient share ofthe potential $3 billion slow-healing DFU market with $146 million in U.S.sales in 2010.
 
 
According to Shire, slow healing DFUs affect nearly 538,000people annually in the United States. The World Health Organization estimatesthere will be an increase in incidence of diabetes of 43 percent in NorthAmerica and 55 percent worldwide from 2007 to 2025, which could positivelyaffect DERMAGRAFT growth prospects since diabetic patients have a 15 to 25percent lifetime risk of developing the condition.
 
The product consists of living cells and a bio-absorbablemesh scaffold, and is designed to stimulate healing in two ways: its meshmaterial is gradually absorbed and the human cells grow into place and replacethe damaged skin; then the living cells in DERMAGRAFT produce many of the sameproteins and growth factors found in healthy skin, which help replace andrebuild the damaged tissue in the DFU.
 
 
Beyond diabetic foot ulcers, the therapy has potential foran expanded indication for venous leg ulcers (VLU). Advanced BioHealing hasfully enrolled multinational trials in the United States, Germany, Poland,Sweden, United Kingdom, Estonia and South Africa to investigate DERMAGRAFT forthe treatment of VLU with data due in the fourth quarter of this year andanticipated U.S. regulatory filing in Q1 2012.
 
 
In the United States, VLUs account for the loss of 2 millionworking days and nearly $3 billion in treatment costs each year. Duration oftreatment can last over a year in many cases, and frequently involves the useof significant healthcare resources, resulting in substantial costs for the U.S.healthcare system.
 
Kevin Rakin, CEO of Advanced BioHealing, who will continueto lead this business within the Shire organization, notes that ABH'sregenerative medicine expertise came about as the result of a 2006 acquisitionfrom Smith & Nephew. Although his company produced 100,000 cell sets in2010, Rakin regarded combining resources with Shire as a way to "develop thebusiness and deliver continued growth within a new environment that is highlycomplementary and will provide great leverage for us."
 
 
Mike Cola, president of Shire's Specialty Pharmaceuticalsbusiness, agrees: "This acquisition is a strong and complementary strategic fitfor Shire," he says. "We will invest in the strengths of Advanced BioHealing'sspecialist commercial team, its manufacturing and its product development. Thepotential to build on the success of DERMAGRAFT is attractive; it's already aleading product providing a solution for a common complication suffered bydiabetics in the U.S. that, if not treated effectively, can lead to lower limbamputation and high cost to patients and society. We believe there's anopportunity to create more value from DERMAGRAFT and Advanced BioHealing'sproprietary technology, and that with Advanced BioHealing's team joining Shire,we can build Advanced BioHealing into an exciting new business providingregenerative medicine for patients' unmet needs."
 
 
Advanced BioHealing has operations on three sites in theUnited States: a manufacturing facility in La Jolla, Calif., corporate officesin Westport, Conn. and research laboratories in Brentwood, Tenn. In order tomeet future demand, the company, under Shire's ownership, plans to expand itsexisting manufacturing capability. Shire will supplement Advanced BioHealing'scurrent manufacturing functions with its manufacturing process and qualityassurance expertise.

Lloyd Dunlap

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