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TOPIC: Dermagraft News

Dermagraft News 20 Jan 2014 09:33 #1236

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On Friday there was a news announcement, which was pretty much shattering for the "biological" wound care business.
Interesting also, since in the past- a lot of scientists, who either were laid off by Cytori for cost savings exercises or left Cytori for other reasons (I at least know 6 of them) went to Advanced Biohealing - the manufacturer of Dermagraft.
In 2011 Shire the big pharma Company HQed in Ireland bought the joint for 750 Mio.

This is news that followed on Friday-

[1/17/2014 6:37:34 AM

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Shire Executes Agreement to Divest DERMAGRAFT®

DUBLIN, January 17, 2014 /PRNewswire/ -- Shire plc (LSE: SHP, NASDAQ: SHPG), the global specialty biopharmaceutical company, today announced that it has entered into a definitive agreement pursuant to which it has sold its DERMAGRAFT assets to Organogenesis Inc. DERMAGRAFT is a living skin substitute indicated for use in the treatment of full-thickness diabetic foot ulcers and is approved for use in the US and Canada. Going forward Organogenesis will assume all financial and management responsibility for DERMAGRAFT.

Flemming Ornskov MD, Chief Executive Officer of Shire, commented: "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. DERMAGRAFT no longer meets these criteria and this divestment will allow us to focus our resources on other projects. Due to the recent Medicare ruling regarding reimbursement for DERMAGRAFT, the business environment has changed, and the prospects for the product have reduced significantly. We believe the best path forward for the patients who benefit from DERMAGRAFT is to transfer it to new ownership in order to provide continued care and availability of their treatment."

Transaction Details

The DERMAGRAFT assets that have been sold to Organogenesis comprise the key operating assets relating to the development, manufacture and sale of the DERMAGRAFT product. These assets include intellectual property relating to DERMAGRAFT including patents, trademarks and know-how; regulatory filings and registrations relating to DERMAGRAFT; certain manufacturing plant, equipment and materials; DERMAGRAFT product inventory and accounts receivable. These assets had a value of $683 million in Shire's September 30, 2013 balance sheet. Shire is generally retaining legacy liabilities relating to the DERMAGRAFT business, including the previously announced Department of Justice investigation relating to the sales and marketing practices of Advanced Biohealing, Inc (now known as Shire Regenerative Medicine, Inc.).

Shire will receive no 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(1). Shire will record a loss on disposal and associated impairment charges of approximately $650 million in the fourth quarter of 2013, which will be excluded from Non GAAP earnings.

DERMAGRAFT operations will be reported as discontinued in Shire's fourth quarter and full year earnings for 2013. The US GAAP operating loss from DERMAGRAFT operations in the nine months ended September 30, 2013 amounted to $324 million including the impairment of goodwill ($192 million recorded in Q1 2013). On a Non GAAP basis for the same period the operating loss for Dermagraft operations was $81 million.

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.
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Dermagraft News 20 Jan 2014 09:40 #1237

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The numbers do not come up properly here too: the hit was 650 Mio and they already took a loss of 390 Mio in the last Q

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Dermagraft News 21 Jan 2014 11:01 #1240

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Cost of goods sold vis a vis relative benefit is going to be the arbiter of who succeeds and who fails. Medicare approved up to 8 treatments of Dermagraft per wound at about $1,385 per treatment. The total cost of treatment is quite high even though the actual treatment process is quite simple. The cost is really in the manufacture of the product/graft, not its application. The fact that the FDA would not approve Dermagraft for PAD also weighed against it

This is a good case study of why BP may be justified in delaying jumping on board the stem cell/regenerative medicine train. Dendreon is another case in point. Both products work but the cost benefit relationship is not sufficiently strong to drive the share price even though they may well be effective (hence approval).

This development may well be positive for CYTX as confirmation that allogeneic expansion is not an economically viable treatment (as yet). :winky:

Some questions I would like to pose with regards to Celution's supplanting Dermagraft and similar products are :
1. Has CYTX made provision for multiple applications of ADRC for treating intractable wounds? Trials?
2. How feasible is it to process a larger amount of adipose and store one or more additional treatment doses?
3. How viable is the stored material?

It would appear to me that the liposuction procedure is the most expensive component (and painful) of the Celution treatment. I can't imagine patients would want to go through the lipo every time they need treatment, especially if there is an alternative.

The true marginal cost of the goods sold (ie. Celase, plastic tubing and cannisters) is probably very low and can compete with any alternative so long as multiple lipos are not required! :woohoo:
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Dermagraft News 22 Jan 2014 11:48 #1241

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A lot of good questions as usual John.

Some questions I would like to pose with regards to Celution's supplanting Dermagraft and similar products are :
1. Has CYTX made provision for multiple applications of ADRC for treating intractable wounds? Trials?
2. How feasible is it to process a larger amount of adipose and store one or more additional treatment doses?
3. How viable is the stored material?


From my perspective I would answer them as follows, but of course all as far as I know or have read-
Q1- the comparable known data are solely the Naples study- here on the site- I do have the full paper and my understanding is that the patients all had just one treatment with the cells providing the impressive results. I think it is save to assume that repeat treatments- 3-4 weeks apart would be beneficial in further improving wound closure and/or blood flow to the extremities to diabetic foot ulcer patiens. A systemic injection i.e. would likely be most effective.
Q2- I guess that is why StemSource was developed- and although Cytori themselves (as usual) are scroogy with data - at least Cryosafe has already conducted trials with cyro-preserved cells proving their viability.
Q3- that is the most interesting one- Jacques Galipeau, professor at Emory has conducted a study an allogeneic preserved cells and concluded that they upon thawing are in a state of shock and required 24 hours of rest to re-gain their viability.
This could explain the mediocre results so far of allo therapy and would make Cytori Cell Therapy they ONLY virtual "off-the-shelf" treatment. Surely the same would apply to ADRC cryo-preserved cells, but that is not an issue I guess.
:grin: :KO:
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Dermagraft News 22 Jan 2014 12:43 #1242

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I forgot something important in answering Q1-

At the time of the Naples study- only localized treatment was allowed in Europe- so the doctors were simply not allowed to inject an additional dose of ADRCs in the leg (IV or intramuscular) of those patients.
Surely this will be different in the study in France- the 160 patients- where combinations would be possible.

We will see. :yep:
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Dermagraft News 27 Jan 2014 07:27 #1261

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Fas,

A trial of 160 patients is very large by historic standards. Do you have a link for this French trial as I have not been able to find any reference to it.

As I assume this is probably being undertaken by a state sponsored organisation I consider this to be a huge endorsement of the technology. Also, given that Cytori already has CE approval in Europe for wound healing is it feasible that a successful outcome could be used for reimbursement purposes ....... particularly if used in intractable wounds?

Such a trial would normally get a company's management yelling from the rafters. Do you have any conspiracy theories as to the silence relating to such trials?

Dermagraft reimbursement in the USA was $1385 per treatment with a limit of 8 treatments per wound. That means $11,000 total per wound........ not exactly cheap ......... and this for wounds that are considerably less severe than those successfully treated with the Celution device. Wound Healing and Scleroderma are indication/trials that can give very quick results. This will force the FDA to face the facts, or quickly be accused with allegations of being in the pocket of BP.

Hopefully the SOCIALIST French medical establishment will work in favour of this poor (and hopefully one day rich) CAPITALIST. :grin: :vegas:
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Dermagraft News 27 Jan 2014 09:34 #1262

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Do you have a link for this French trial as I have not been able to find any reference to it.


No- I do not have a link. Actually DOV was at the Annual Meeting last year and wrote a long analysis of the "Cytori state of the nation" to his many investment friends. He provided me a copy too- but it was not supposed to be a public document. I just picked out this information, since it was based on conversations he had with Cytori Management and they are a reliable source (I presume).

Through the grapevine one picks up a lot of bits and pieces, which in the grand scheme of things appear highly important, but very little of all that is coming out of Callan Road to relieve us from the share price miseries. Sometimes I have the feeling, they do not care about that and like the position they are in- that is, working in the twilight zone without getting attention, which could wake up sleeping Wallstreet in respect of the future relevance of the technology. i.e. create even more copiers wanting to make a fast buck.

It is what it is. Wound healing, ortho and sports medicine, I think will also be big business in the future- so the hamstring clinic is just an indication that there is more to come from that front. :grin:
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