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Shire to Buy Advanced BioHealing for $750 Million

From Associated Press (May 17, 2011)

NEW YORK -- Irish biopharmaceutical company Shire PLC said Tuesday that it is buying Advanced BioHealing Inc. for $750 million.

Shire said it will pay for the deal from its current cash stores, and the acquisition will not change the company's financial outlook for 2011. The purchase requires antitrust approval.

Venture capital firm Safeguard Scientifics Inc., an Advanced BioHealing investor since 2007, said it expected to get more than $140 million in cash from the sale, which it said was more than a 13-fold return.

Privately held Advanced BioHealing makes products for tissue regeneration, including Dermagraft, a skin substitute used to treat diabetic foot ulcers.

In detailing its rationale for the acquisition, Shire pointed to forecasts of more cases of diabetes, which could increase demand for Dermagraft, and to coverage of the skin substitute by Medicare and many private insurers.

Shire said Advanced BioHealing has a 5 percent patient share of treating slow-healing diabetic foot ulcers in the U.S., producing sales of $146 million last year.

The deal represents Safeguard's third substantial exit transaction in the past six months. In December, Clarient was acquired by GE Healthcare for $587 million. Safeguard realized a total of more than $200 million in cash from the sale of its equity stakes in the company between 2009 and 2010. Also in December, Avid Radiopharmaceuticals was acquired by Eli Lilly for an upfront payment of $300 million and up to $500 million in additional payments based on Avid meeting certain regulatory and revenue targets.

U.S.-traded shares of Shire fell 42 cents to close at $93.36. Safeguard Scientifics' shares rose $1.77, or more than 9 percent, to $21.60 in aftermarket trading on the news.


Posted: May 2011