By RTT News,
January 17, 2014, 04:01:00 AM EDT
(RTTNews.com) - Shire Plc (SHP.L, SHPG) Friday announced sale of its $683 million worth Dermagraft assets to Massachusetts-headquartered regenerative medicine company Organogenesis Inc.
Shire said it will record a loss on disposal and associated impairment charges of about $650 million in the fourth quarter of 2013, which will be excluded from non-GAAP earnings.
According to the Dublin, Ireland-based drug maker, it will not receive an upfront payment from 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.
Dermagraft is a living skin substitute indicated for use in treatment of full-thickness diabetic foot ulcers.
The assets sold to Organogenesis comprise key operating assets related to the development, manufacture and sale of the Dermagraft product. The assets had a value of $683 million as at September 30, 2013, in the firm's balance sheet.
Organogenesis will assume all financial and management responsibility for Dermagraft. The product is approved for use in the U.S., and Canada.
Flemming Ornskov, 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."
According to Shire, it is divesting Dermagraft as it no longer meets these criteria. In addition, the recent Medicare ruling has significantly reduced prospects for the product.
The sale will also allow the firm to focus its resources on other projects, Shire said.
Dermagraft operations will be reported as discontinued in Shire's fourth quarter and full year earnings for 2013.
In advance of its Full-year 2013 earnings release scheduled for February 13, 2014, Shire will issue a further press release providing historical quarterly analysis for 2012 and 2013 restated to show the Dermagraft operations as discontinued.
Lazard and Davis Polk & Wardwell LLP acted as advisors to Shire.
SHP.L is currently trading at 2,998 pence, up 13 pence or 0.44 percent on the LSE.
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