Shire to sell diabetic foot ulcer treatment Dermagraft to Organogenesis Inc

British speciality biopharmaceutical company Shire Plc today agreed to sell Dermagraft - a living skin substitute indicated for use in the treatment of full-thickness diabetic foot ulcers, to Organogenesis Inc, for no upfront payment.

Shire, Britain's third-biggest drugmaker, said that the Dermagraft assets that have been sold to Organogenesis comprise the key operating assets relating to the development, manufacture and sale of the Dermagraft product.

These assets include intellectual property relating to Dermagraft, including patents, trademarks and know-how; regulatory filings and registrations and certain manufacturing plant, equipment and materials.

These assets had a value of $683 million according to Shire's 30 September 2013 balance sheet.

Shire said that it is generally retaining legacy liabilities relating to the Dermagraft business, including the previously announced US Department of Justice investigation relating to the sales and marketing practices of Advanced Biohealing, Inc (now known as Shire Regenerative Medicine, Inc.).

Dermagraft came into Shire's portfolio through its  2011 acquisition  of privately held Advanced BioHealing for $750 million. (See: Shire to acquire regenerative medicine firm Advanced BioHealing for $750 mn)

Shire will receive no upfront payment from Massachusetts-based Organogenesis but is entitled to receive up to $300 million cash in total milestone payments should Organogenesis meet certain annual net sales targets between now and 2018.

Shire said that it will record a loss on disposal and associated impairment charges of approximately $650 million in the fourth quarter of 2013.

The Dublin-based company would record a loss on disposal of approximately $650 million in the fourth quarter of 2013, which will be excluded from Non GAAP earnings.

Flemming Ornskov, CEO of Shire said, ''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.''

Shire focuses its business on attention deficit hyperactivity disorder, human genetic therapies and GI diseases as well as opportunities in other therapeutic areas 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 was originally headquartered in Hampshire, UK, but moved its corporate office to Dublin and created a new holding company in Jersey in the Channel Island to avoid high taxes on global earning in the UK.

Ireland's corporate taxes are far lower than the UK and patents lodged in Ireland are tax free.