Shire spends £460m on US ulcer remedy

 
City A.M. Reporter
BRITISH drugmaker Shire said yesterday that it plans to buy privately held Advanced BioHealing, maker of a bio-engineered skin substitute, for $750m (£462m) in cash.

Advanced BioHealing’s Dermagraft skin substitute is used to treat slow-healing diabetic foot ulcers.

Shire said it would finance the purchase through existing cash resources and expects no impact from the deal on its 2011 outlook.

Based on the acquisition, Shire said it planned to establish a new regenerative medicine business unit led by Kevin Rakin, Advanced BioHealing’s chief executive.

“We believe the product is broadly applicable to hard-to-heal wounds,” said Stephen Bloch, a partner in Canaan Partners, a founding investor in Advanced BioHealing.

Canaan, Advanced BioHealing’s largest shareholder with a 30 per cent stake, guided the company’s growth from an initial investment of $15m in 2006.

Before the deal was announced, Advanced BioHealing had been planning to go public. Its initial public offering was expected to raise up to $214m next Tuesday, with shares expected to begin trading on the New York Stock Exchange on Wednesday.

Safeguard Scientifics, a holding company with an investment in Advanced BioHealing, said it stood to receive $140m in connection with the Shire transaction, which is expected to close in the second or third quarter.