17th Jan 2014 07:57
LONDON (Alliance News) - Shire PLC said Friday that it had sold its Dermagraft living skin substitute assets to the US's Organogenesis Ltd, as it said the prospects of the product had been "significantly" reduced, and will take a USD650 million loss on the disposal.
Massachusetts-based Organogenesis will make no upfront payment for the assets but will pay up to USD300 million in milestones payments should it meet certain performance criteria in the next four years.
Shire noted that the one-off loss related to the disposal and associated impairment charges would be excluded from non generally accepted accounting principals earnings, and will be reported as discontinued in its fourth quarter and full year earnings. The assets had a value of USD683 million.
Dermagraft is used in the treatment of diabetic foot ulcers and is approved for use in the US and Canada.
Dermagraft operations saw a US GAAP operating loss of USD324 million, including the impairment of goodwill, for the nine months ended September 30.
"We have been prioritizing investments that are of the greatest strategic, clinical and commercial value to our company," said Shire Chief Executive Officer Flemming Ornskov in a statement. "Dermagraft no longer meets these criteria and this divestment will allow us to focus our resources on other projects."
The decision follows a ruling by Medicare, the US national medical insurance programme, on reimbursement for Dermagraft, which Shire said had changed the business environment and reduced the prospects of the product.
Shire will announce its full year results February 13.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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