anatomy of the advanced biohealing acquisition
DESCRIPTION
Gary J. Kurtzman, MD, Senior Vice President, and Managing Director of the Safeguard Life Sciences Group, presented the story of Shire's acquisition of Advanced BioHealing (ABH) at the 2011 Southeast BIO Investor Forum in North Carolina. This presentation details how ABH established a viable commercial infrastructure with the help of Safeguard, leading to an acquisition by Shire.TRANSCRIPT
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Our purpose
We enable people with life-altering conditions to lead better lives
The Story of Shire’s Acquisition of
Advanced BioHealing, Inc.
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Panelists
• Rosina Pavia (moderator)Partner, Pappas Ventures
• Barbara DeptulaEVP & Chief Corporate Development Officer, Shire plc.
• Gary Kurtzman, MDSVP and Managing Director, Safeguard Scientifics
• Dean TozerSVP Corporate Development, Advanced BioHealing Inc.
To be as brave as the people we help
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Agenda
• ABH History and Journey to an Exit
• The Investor Perspective
• The Acquirer Perspective
• Q&A
To be as brave as the people we help
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Agenda
• ABH History and Journey to an Exit
• The Investor Perspective
• The Acquirer Perspective
• Q&A
To be as brave as the people we help
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Major Milestones
To be as brave as the people we help
1990’s:Advanced Tissue Sciences (ATS) invests >$300M developing Dermagraft & TransCyte
2000:ATS forms marketing partnership with Smith & Nephew
2001: DG approved by the FDA to treat DFU
2002: ATS files for bankruptcy
2003:S&N purchases DG from bankruptcy and continues with commercialization
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Major Milestones
To be as brave as the people we help
2005: Smith & Nephew shuts down production
2006: ABH purchases assets
2007: First ABH manufactured DG shipped in the U.S.
2010: DG sales reach $147M in U.S.
2011: Shire completes $750M acquisition of ABH
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Fund Raising
To be as brave as the people we help
2003
$2.4M
2005
Series A
$8.0M
Series B
2007
$30.0M
Series C
$10.0M
Friends, family & angels
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Robust Revenue Growth
To be as brave as the people we help
CAGR =
15
7%
Annual Revenue(in millions)
Annual Revenue(in millions)
2Q11 vs. 2Q10(in millions)
2Q11 vs. 2Q10(in millions)
32%
2Q11
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ABH Strategic Growth Options
ABH Strategic Growth Options• Private Equity• IPO• Merger & Acquisition
Goals• Execute on our vision and “3 Point Growth Plan” • Build out balance sheet• Allow our early investors an exit
To be as brave as the people we help
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Evaluation of Options
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To be as brave as the people we help
Down To The Wire
January May2011
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Why Shire?
• Share a common vision for Regenerative Medicine
• ABH is a “corner property”• Similar culture and patient-centric values
• $20B market cap, $4B in revenues, strong balance sheet
• Management team & employees lead a new business area
• International infrastructure
To be as brave as the people we help
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Agenda
• ABH History and Journey to an Exit
• The Investor Perspective
• The Acquirer Perspective
• Q&A
To be as brave as the people we help
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Investor Perspective
Series C (Feb. 2007): What were we thinking?
Products/Pipeline– Dermagraft (DFU) – 30K units/$15M under S&N and losing money
– Trancyte (burns)
– Celladerm – Next gen product
Wound healing – “Let me discuss it at our partners meeting and we’ll get back to you.”Right place at the right time
– Reimbursement study
– High-touch, “high-science” sales and marketing plan
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Investor Perspective
Post Series C (2007–2010): What were we thinking?
Products/Pipeline– Dermagraft – traction in marketplace from day 1
– Transcyte – no ROI/sell product to government for strategic stockpile
– Celladerm – no ROI/cut program
Infrastructure– Leverage
• Products or development
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Investor Perspective
Post Break-Even (2010–2011): What were we thinking?
Products/Pipeline– Dermagraft – $80M growing to $200M
– Transcyte – bureaucracy
Infrastructure– Leverage
• Products – not a lot at a price we could afford
• Development eats EBIT
“Strategic Alternatives”– M&A
– Private Equity
– IPO
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Investor Perspective
To be as brave as the people we help
January May2011
Fear and GreedGreedMoreGreed
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Investor Perspective
To be as brave as the people we help
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Agenda
• ABH History and Journey to an Exit
• The Investor Perspective
• The Acquirer Perspective
• Q&A
To be as brave as the people we help
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Regenerative Medicine: a New Growth Area
Long-standing area of strategic interest for Shire:
High unmet needs in select disease states (e.g. wound healing, bone and tissue repair, organ transplantation, etc.), not adequately addressed with conventional therapy
Clinical and economic value to all stakeholders Sustainable exclusivity - Seek metabolically active products with a
BLA, NDA or Class III PMA regulatory pathways: Premium market position dependent on data acquisition Reject 510(k) “innovation”
Goal of Regenerative Medicine: to revitalise damaged tissues and organs resulting from disease, injury or even the normal aging process
Includes: artificial skin, neural regeneration, islet cells for diabetes, substantial heart repair, new bone growth, progress to bladders, livers, kidneys
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Strong Fit to Criteria for Corner PropertyStrategic Symptomatic Disease High level of Unmet Need Disease knowledge – comes with asset Compelling value proposition to Patients, Physicians and Payers~ Patient age – prefer younger population Specialist physicians/limited number of call points Sustainable IP/market exclusivity Prefer Global rights (Note: only registered in US to date) Expect to achieve #1 or #2 Market position~ Low R&D technical risk
Financial $250m+ peak sales 15+% revenue growth Limited R&D spending EBITDA >30%
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Unique Value Opportunity in the Space
Commercially successful business model in cell therapy Derma graft is the market leader in the metabolically active segment
of wound healing Low current and expected competition in biological treatments for
DFU Excellent reimbursement for Derma graft in US Compelling cost benefit arguments Length of exclusivity beyond patent expiries because of high
investment barrier to entry Extension of the fibroblast expression platform acquired with TKT Leverages HGT manufacturing, engineering and QA expertise Patient-centric approach is consistent with Shire’s 2020 strategy
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To be as brave as the people we help
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Advanced BioHealing…Advanced Timeline
NYSE bell ringing set for May 18th
Due diligence and negotiations May 3rd–17th
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The Headline…
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Shire to establish new Regenerative Medicine business unit through cash acquisition of Advanced BioHealing, Inc., including US marketed DERMAGRAFT®
Shire to establish new Regenerative Medicine business unit through cash acquisition of Advanced BioHealing, Inc., including US marketed DERMAGRAFT®
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Agenda
• ABH History and Journey to an Exit
• The Investor Perspective
• The Acquirer Perspective
• Q&A
To be as brave as the people we help
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Our purpose
We enable people with life-altering conditions to lead better lives
Thank You