LONDON Jan 17 (Reuters) - British pharmaceutical firm Shire said on Friday it had agreed to divest Dermagraft, a bio-engineered skin substitute used to treat diabetic foot ulcers, to Organogenesis for no upfront payment.
Shire acquired Dermagraft in June 2011 through its $750 million purchase of privately held Advanced BioHealing, but the treatment failed to realise its development hopes when a late-stage trial to treat venous leg ulcers disappointed later that year.
The company said on Friday that the prospects for the product had reduced significantly following a recent Medicare ruling on reimbursement.
It said it would receive no upfront payment from Canton, Massachusetts-based Organogenesis for the assets, but it would be entitled to receive up to $300 million cash in total milestone payments if it meets sales targets.
It said it would record a loss on disposal of approximately $650 million in the fourth quarter of 2013, which will be excluded from Non GAAP earnings.