Shire to Establish new Regenerative Medicine Business Unit Through Cash Acquisition of Advanced BioHealing, Inc., Including US Marketed DERMAGRAFT(R)
DUBLIN, May 17, 2011 /PRNewswire-FirstCall/ -- Shire plc (LSE: SHP, NASDAQ: SHPGY), the global specialty biopharmaceutical company, announces that it has signed an agreement to acquire Advanced BioHealing, Inc.
- Creation of a new strategic platform based on tissue regeneration using cell-based therapies complements Shire's existing specialty focus and biologics manufacturing capability - Strong strategic fit with Shire - High medical need for symptomatic condition in growing and under-penetrated market, served by specialist physicians - A leading US marketed product for diabetic foot ulcers (DFUs) - Small specialised commercial team with a strong focus on customers and patients - Delivers value through satisfying high patient need - Purchase price of $750 million in cash, financed from Shire's existing cash resources - Closing of the transaction is subject to customary conditions, including obtaining anti-trust clearances - Adds DERMAGRAFT to Shire portfolio - attractive US marketed product with further growth potential - A regenerative bio-engineered skin substitute indicated for use in the treatment of diabetic foot ulcers greater than six weeks in duration - Already achieved 5% patient share of the potential $3 billion slow healing DFU market; $146 million in US sales in 2010 - Slow healing DFUs affect nearly 538,000(7) people annually in the US - Favorable reimbursement profile - Significant cost of not treating DFU effectively - Further growth prospects through potential expanded indication for Venous Leg Ulcers (VLU) - High regulatory, development and manufacturing hurdles for potential competitors - Combines Advanced BioHealing's world-class experience and commercial capability in regenerative medicine with Shire's strengths and expertise in human cell biological manufacturing - Opportunity to invest in and build - Leverage Shire's biological manufacturing expertise to improve Advanced BioHealing's manufacturing efficiency and expanding capacity - Improve disease awareness and prompt earlier medical intervention - Enhance Advanced BioHealing's already impressive commercial success with Shire's commercialisation expertise and international infrastructure - Platform to potentially acquire additional regenerative medicine assets - Value and growth enhancing. Shire confirms that its business continues to perform well. Due to the modest short term financial effect of the acquisition this year, there will be no impact to our previously stated guidance for 2011
Mike Cola, President of Shire's Specialty Pharmaceuticals business comments:
"This acquisition is a strong and complementary strategic fit for Shire. We will invest in the strengths of Advanced BioHealing's specialist commercial team, its manufacturing and its product development. The potential to build on the success of DERMAGRAFT is attractive; it's already a leading product providing a solution for a common complication suffered by diabetics in the US that, if not treated effectively, can lead to lower limb amputation and high cost to patients and society. We believe there's an opportunity to create more value from DERMAGRAFT and Advanced BioHealing's proprietary technology and that with Advanced BioHealing's team joining Shire, we can build Advanced BioHealing into an exciting new business providing regenerative medicine for patients' unmet needs."
Kevin Rakin, Chief Executive Officer of Advanced BioHealing, who will continue to lead this business within the Shire organization, comments:
"This is a very exciting opportunity for all of us at Advanced BioHealing to develop the business and deliver continued growth within a new environment that is highly complementary and will provide great leverage for us. We all look forward to being part of Shire."
Strategic Rationale for the Transaction
Acquiring Advanced BioHealing brings both a US marketed product with opportunity for further growth and world-class expertise in regenerative medicine, enabling Shire to establish a new strategic business unit.
DERMAGRAFT treats a symptomatic condition, DFU, with a high level of medical need. There are 538,000(7) cases of slow healing DFU annually in the US. The condition is treated by specialist physicians (Shire's core focus) in wound care centers, select physicians' offices, Veteran Affairs (VA) Medical centers and clinics.
The World Health Organisation estimates an increase in incidence of diabetes of 43% in North America and 55% worldwide from 2007-2025 which could positively affect DERMAGRAFT growth prospects since diabetic patients have a 15%-25% lifetime risk of developing a DFU(8,9).
DERMAGRAFT is a leading treatment in the slow healing segment of the DFU market and currently has a 5% share of that potential $3 billion market.
DERMAGRAFT has a strong value proposition to patients, physicians and payers; there are approximately 65,000(1) non-traumatic lower limb amputations in the US performed in people with diabetes annually. Comprehensive foot care programs that include foot-care education and preventive therapy, treatment of foot problems, and referral to specialists, can reduce amputation rates by 45% to 85%(1).
DERMAGRAFT has a favorable reimbursement profile, with Medicare (100% coverage), more than 1,000 private plans, the Veteran's Administration, and numerous Medicaid programs.
Generic or similar products to DERMAGRAFT would have to overcome high regulatory, development and manufacturing hurdles, including the performance of long, costly clinical trials, to enter the DFU market.
Shire and Advanced BioHealing believe there is potential to improve disease awareness and prompt earlier medical intervention. Shire will seek to build on Advanced BioHealing's already impressive commercial success with Shire's commercialisation expertise and international infrastructure.
With the acquisition Shire will own the global rights for DERMAGRAFT and will continue to invest in the development of new indications and new geographies, pending regulatory approvals.
Advanced BioHealing has fully enrolled multi-national trials (in US, Germany, Poland, Sweden, UK, Estonia and South Africa) to investigate DERMAGRAFT for the treatment of Venous Leg Ulcers (VLUs); data is due in Q4 this year with anticipated US filing in Q1 2012. In the U.S., VLUs account for the loss of 2 million working days and nearly $3 billion in treatment costs each year. Duration of treatment can last over a year in many cases, and frequently involves the use of significant healthcare resources, resulting in substantial costs for the U.S. healthcare system(2).
DERMAGRAFT is approved but not yet marketed for DFU in Israel, S. Africa, and Singapore. An application was filed in Canada for DFU in March, 2011; undergoing dual review by both the biologics and medical device divisions. Advanced BioHealing's ongoing or planned submissions for DFU include Mexico, Saudi Arabia, United Arab Emirates and Malaysia.
About Advanced BioHealing
Advanced BioHealing is a privately held leading regenerative medicine company that develops, manufactures and commercializes living cell-based therapies for regenerative medicine. Advanced BioHealing has over 400 full time employees based in the US, including an in-house commercial team of over 150 professionals comprising sales, marketing, reimbursement and policy professionals with backgrounds in the pharmaceutical, medical device and biotechnology industries. The company, like Shire, focuses its small sales team on specialist physicians.
Shire intends to retain Advanced BioHealing's expertise and to invest in building upon its world-class talent base to drive further value creation. The Advanced BioHealing business will become part of Shire's Specialty Pharmaceuticals business, led by Mike Cola, and will leverage biologic manufacturing expertise from Shire's Human Genetic Therapies business.
Advanced BioHealing has operations on three sites in the US: a manufacturing facility in La Jolla, California, corporate offices in Westport, Connecticut and research laboratories in Brentwood, Tennessee. In order to meet future demand, Advanced BioHealing, under Shire's ownership, plans to expand its existing manufacturing capability and Shire will supplement Advanced BioHealing's current manufacturing functions with Shire's manufacturing process and quality assurance expertise.
DERMAGRAFT is a regenerative bio-engineered skin substitute that assists in restoring damaged tissue.
DERMAGRAFT is indicated for use in the treatment of full-thickness diabetic foot ulcers greater than six weeks in duration, which extend through the dermis, but without tendon, muscle, joint capsule, or bone exposure. DERMAGRAFT should be used in conjunction with standard wound care regimens and in patients that have adequate blood supply to the involved foot(6).
DERMAGRAFT consists of living cells and a bio absorbable mesh scaffold. It is designed to stimulate healing in two ways: firstly, its mesh material is gradually absorbed and the human cells grow into place and replace the damaged skin and secondly, the living cells in DERMAGRAFT produce many of the same proteins and growth factors found in healthy skin, which help replace and rebuild the damaged tissue in the DFU.
Data from Advanced BioHealing's 2001 pivotal clinical trial demonstrated that the weekly application of DERMAGRAFT and conventional therapy for up to eight weeks increased the proportion of DFUs of greater than six weeks duration that achieved 100% closure at 12 weeks by 64%, a statistically significant improvement, when compared to conventional therapy alone.
DERMAGRAFT is contraindicated for use in ulcers that have signs of clinical infection or in ulcers with sinus grafts, and in patients with known hypersensitivity to bovine products as it may contain trace amounts of bovine proteins from the manufacturing medium and storage solution. Adverse events observed in clinical trial included wound infection, osteomyelitis, and cellulitis(6).
About Diabetic Foot Ulcers (DFUs) and Venous Leg Ulcers (VLUs)
DFUs are open sores or ulcers on the feet that can occur in people with diabetes as a result of peripheral neuropathy, or damage to nerves, and can severely compromise a patient's quality of life. Diabetic patients have a 15%-25% lifetime risk of developing a DFU(8,9).
VLUs are common in patients with a history of leg swelling, varicose veins, or a history of blood clots in either the superficial or the deep veins of the legs. VLUs affect 500,000 to 600,000 people in the United States every year and account for 80 to 90 percent of all leg ulcers(10).They are treated in the same wound center and hospital locations as patients with DFU.
Closing of the transaction is subject to customary conditions, including obtaining anti-trust clearances.
Barclays Capital is acting as financial adviser to Shire. BofA Merrill Lynch acted as financial adviser to Advanced BioHealing, Inc. Notes to editors SHIRE PLC
Shire's strategic goal is to become the leading specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on attention deficit hyperactivity disorder (ADHD), human genetic therapies (HGT) and gastrointestinal (GI) diseases as well as opportunities in other therapeutic areas to the extent they arise through acquisitions. Shire's in-licensing, merger and acquisition efforts are focused on products in specialist markets with strong intellectual property protection and global rights. Shire believes that a carefully selected and balanced portfolio of products with strategically aligned and relatively small-scale sales forces will deliver strong results.
For further information on Shire, please visit the Company's website: http://www.shire.com.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, the Company's results could be materially adversely affected. The risks and uncertainties include, but are not limited to, risks associated with: the inherent uncertainty of research, development, approval, reimbursement, manufacturing and commercialization of the Company's Specialty Pharmaceutical and Human Genetic Therapies products, as well as the ability to secure and integrate new products for commercialization and/or development; government regulation of the Company's products; the Company's ability to manufacture its products in sufficient quantities to meet demand; the impact of competitive therapies on the Company's products; the Company's ability to register, maintain and enforce patents and other intellectual property rights relating to its products; the Company's ability to obtain and maintain government and other third-party reimbursement for its products; and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission.
(1) Centers for Disease Control and Prevention. National diabetes fact sheet: national estimates and general information on diabetes and prediabetes in the United States, 2011. Atlanta, GA: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, 2011.
(2) Drug Discovery & Development, Nexagon Greatly Reduces Venous Leg Ulcer Size, July 13, 2010.
(3) Lavery, et al. Evaluating the prevalence and incidence of foot pathology in Mexican Americans and non-Hispanic whites from a diabetes management cohort. Diabetes Care. 2006;26:1435-1438.
(4) Ramsey et al. Incidence, outcomes, and cost of foot ulcers in patients with diabetes. Diabetes Care. 1999;22:382-387.
(5) Diabetic Foot Ulcer (DFU) Therapeutics - Pipeline Assessment and Market Forecasts to 2017, GlobalData, April 2011.
(6) DERMAGRAFT Prescribing Information.
(7) Margolis, et al. Diabetic healing of neuropathic foot ulcers receiving standard treatment. A meta-analysis. Diabetes Care. 1999; 22(5):692-695.
(8) Sanders LJ. Diabetes mellitus: prevention of amputation. J Am Podiatric Assoc. 1994;84:322-328.
(9) Singh N, Armstrong DG, Lipsky BA. Preventing foot ulcers in patients with diabetes. JAMA. 2005;293:217-28.
(10) Cleveland Clinic website, Lower Extremity (Foot and Leg) Ulcers. For further information please contact: Investor Eric Rojas (email@example.com) +1-781-482-0999 Relations Sarah Elton-Farr (firstname.lastname@example.org) +44(0)1256-894157 Media Jessica Mann (email@example.com) +44(0)1256-894-280 Matthew Cabrey (firstname.lastname@example.org) +1-484-595-8248
SOURCE Shire plc