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Shire Divests Dermagraft Assets at a Loss

By Kristin Brooks | January 17, 2014

Eligible to receive $300 million in sales milestones from Organogenesis

Shire plc has entered into a definitive agreement to sell its Dermagraft assets to Organogenesis, Inc. at a loss of approximately $650 million. Shire is eligible to receive as much as $300 million in milestone payments if sales targets through 2018 are met. Dermagraft, a living skin substitute, is approved in the U.S. and Canada for the treatment of full-thickness diabetic foot ulcers.
Shire gained Dermagraft with the acquisition of Advanced BioHealing for $750 million in 2011. Just following the acquisition, Dermagraft failed to gain approval for the treatment of leg ulcers.
Flemming Ornskov MD, chief executive officer of Shire, said, "Following the new strategy we outlined during the first half of last year, Shire has had a renewed focus on operational discipline. As such, we have been prioritizing investments that are of the greatest strategic, clinical and commercial value to our Company. Dermagraft no longer meets these criteria and this divestment will allow us to focus our resources on other projects. Due to the recent Medicare ruling regarding reimbursement for Dermagraft, the business environment has changed, and the prospects for the product have reduced significantly. We believe the best path forward for the patients who benefit from Dermagraft is to transfer it to new ownership in order to provide continued care and availability of their treatment."