Shire Adds To HGT Unit With Lotus Acquisition; Gets Preclinical Rare Disease Treatment
This article was originally published in The Pink Sheet Daily
Executive Summary
Shire makes a bolt-on acquisition that will complement both its rare disease franchise and its regenerative medicines unit.
Shire PLC is continuing to bring in assets through bolt-on acquisitions that can expand its growing Human Genetic Therapies business – a group that has been thriving since its inception in 2005. Its latest addition is the ultra-rare disease-focused biotech Lotus Tissue Repair Inc.
The specialty pharma announced Jan. 8 that it is taking over the small Cambridge, Mass.-based biotech for an undisclosed upfront payment and the promise of future milestones. Lotus investor Third Rock Ventures declined to reveal the multiple it got back on their investment.
“Shire is always looking to partner or acquire companies who have life-altering therapies and are looking for a global development and commercial partner. Taking all of this into consideration, Lotus Tissue Repair was the right strategic fit for us,” said Phil Vickers, Shire’s Global Head of R&D, in an e-mail.
The draw of the small company is its late preclinical stage treatment for dystrophic epidermolysis bullosa (DEB), a severe genetic disorder that causes fragile skin and blistering particularly in the mouth, esophagus, and lower GI tract. DEB is a more serious form of epidermolysis bullosa and affects about 300,000 people worldwide. The lead product candidate is an intravenous protein-replacement therapy that is meant to replace the missing or defective human collagen type VII in DEB patients.
“Shire is the ideal partner in many perspectives,” said Neil Exter, a partner at Third Rock. “They obviously know a lot about the rare disease space. They have the manufacturing capabilities to manufacture these proteins and they know how to do development.”
The technology is thought to offer application in other skin diseases including diabetic foot ulcers and venous stasis ulcers.
Lotus was founded in 2011 and conducted a $26 million Series A through its sole investor, Third Rock (Also see "Lotus Tissue Repair Scores $26 Million in Series A Round" - Pink Sheet, 29 Jun, 2011.). The tiny company is manned solely by CEO Mark de Souza. De Souza, James Fordyce and Third Rock partner Philip Reilly co-founded the company along with the University of Southern California professors who invented the technology, Mei Chen and David Woodley. Chen and Woodley acted as scientific advisors to the company. De Souza is expected to join the HGT staff located in Lexington, Mass.
“The animal models that exist for EB are complex, but there are some that closely mimic the human condition. Shire got a hold of that data and that’s what led to this deal,” added Exter.
For Third Rock, this is the second exit it has managed to pull off for one of its investments since its inception in 2007. Previously, portfolio company Alnara Pharmaceuticals Inc. was bought out by Eli Lilly & Co. in July 2010. The big pharma purchased the biotech for its then-Phase III enzyme replacement therapy treatment Solpura (liprotamase). The product since has been shot down by FDA (Also see "Lilly To Buy Alnara And Its Non-Porcine Pancreatic Enzyme Replacement Therapy" - Pink Sheet, 2 Jul, 2010.).
Exter said the venture firm is particularly excited about the companies it is working with currently and that he expects 2013 to be a big year for Third Rock’s portfolio.
Joining A Strong Franchise
Shire’s HGT business has been growing in strength since it was founded seven years ago with the $1.6 billion purchase of Transkaryotic Therapies (Also see "Shire/TKT: The Price of Diversification" - In Vivo, 1 May, 2005.). Critics of the company noted the relatively unproven commercial potential of rare disease treatments at the time. Since then, Shire has shown that it can create a healthy business out of niche disease areas – a model that many other pharma companies are trying to mimic.
Shire has launched four drugs under the HGT banner including Vpriv (velaglucerase alfa) for Gaucher disease, Elaprase (idursulfase) for Hunter Syndrome, Replagal (agalsidase alfa) for Fabry disease and Firazyr (icatibant) for hereditary angioedema. About 31% of Shire’s $4.2 billion in 2011 revenues came from these drugs.
The assets from Lotus also will complement a Phase III program that Shire’s Regenerative Medicine’s unit has been developing, ABH001, a dermal substitute therapy for the treatment of non-healing wounds in patients with EB. The company’s Regenerative Medicines unit was launched in 2012 after Shire acquired Shire Regenerative Medicine Inc. for $750 million (Also see "Advanced BioHealing To Bring Regeneration To Shire" - Pink Sheet, 23 May, 2011.).