Shire sheds Dermagraft assets for $300 million in milestone payments

Ireland-headquartered drugmaker Shire (LSE: SHP) has agreed to sell its Dermagraft (human fibroblast-derived dermal substitute) assets to US-based regenerative medicine company Organogenesis citing poor prospects for the product.

Dermagraft is a living skin substitute indicated for use in the treatment of full-thickness diabetic foot ulcers and is approved for use in the USA and Canada. The product was acquired by Shire in 2011 along with its buy of USA-based regenerative medicine company Advanced BioHealing for $750 million (The Pharma Letter May 18, 2011). Under the agreement, Organogenesis will assume all financial and management responsibility for Dermagraft.

Shire chief executive Flemming Ornskov 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."