Anatomy of a Deal: Advanced BioHealing

Posted by | November 11, 2011

Last week our own Gary J. Kurtzman, MD, Senior Vice President and Managing Director in the Safeguard Life Sciences Group, participated on a panel at the Southeast BIO Investor Forum in North Carolina that featured “The Story of Shire’s Acquisition of Advanced BioHealing“. Other panelists included:

You can see the entire presentation here:

The story goes something like this—back in 2007, life sciences partner company ABH re-launched its business, focusing solely on the sale of Dermagraft. ABH’s strong management team was then able to take the abandoned product and turn it into a $150 million business in just two years. With Dermagraft, ABH transformed the way diabetic foot ulcers, a chronic medical condition facing many diabetes patients, were being treated, while also offering a possibility to extend Dermagraft’s utility to other areas of wound healing.

Safeguard deployed capital in ABH in February 2007, when the company had virtually no revenue, because we saw an incredible market opportunity for ABH’s regenerative medicine products. Since then, ABH established a viable commercial infrastructure and scaled its cell-based manufacturing capability. By adhering to our disciplined strategy, we were able to support ABH financially and operationally to drive the company’s growth.

In 2010, revenues had grown to approximately $150 million—representing a CAGR of approximately 157 percent. The ABH team, with strategic direction from Safeguard and other investors, was able to capture the unique regenerative medicine market. Dermagraft became the market leader in the metabolically active segment of wound healing. ABH was distinctively positioned because of its ability to supply a unique value opportunity with a commercially successful business model in cell therapy.

Shire identified regenerative medicine as a new, significant growth opportunity, with unmet needs in select disease sates that did not have adequate conventional therapies; such as wound healing, bone and tissue repair, and organ transplantation. As a result of ABH’s significant traction, Shire purchased ABH to create a new strategic platform based on tissue regeneration using cell-based therapies. This acquisition complemented Shire’s existing specialty focus and biologics manufacturing capability.

On June 28, 2011, Safeguard realized aggregate cash proceeds of approximately $150 million from the completed sale of ABH to Shire, of which $7.3 million will be held in escrow until March 31, 2012. Our total expected proceeds will constitute a 14x cash-on-cash return for Safeguard.

We are proud of ABH’s success in building a premier regenerative medicine company. We believe that Shire’s acquisition is a testament to the ability of Safeguard to help create and drive value in our partner companies.

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