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Shire Hunts More Deals Amid Reawakening Interest in Stem Cell R&D

Xconomy San Diego — 

[Updated 10/29/09 12:20 pm. See below.] As the Stem Cell Meeting on the Mesa convenes its second annual investor and partnering forum in San Diego this morning, Dean Tozer says the last 18 to 24 months have seen a rejuvenation of interest in the commercial prospects for biomedical products arising from stem cell research and development.

“We went through a period where the embryonic stem cell stuff just put a pall on the industry, and stalled new investment,” says Tozer, who is the vice president of corporate development at Shire Regenerative Medicine, a new business that the Irish pharma giant has focused in San Diego. Now Tozer says he’s sensing a widespread renewal of interest in regenerative medicine.

Any reawakened interest in the commercial applications of stem cell R&D could, of course, be due partly to Shire itself. The company acquired Advanced BioHealing, based in Connecticut and San Diego, for $750 million in 2011. That was followed earlier this year by the acquisition of San Carlos, CA-based FerroKin BioSciences for at least $325 million, and Cambridge, MA-based Pervasis Therapeutics for an estimated $200 million in April.

As we reported in June, Shire also is moving ahead with plans to develop a new corporate campus in San Diego for its regenerative medicine division—which the Irish specialty pharmaceutical expects to become a $1 billion business.

Shire RM VP of Corporate Development Dean Tozer

Dean Tozer

[Updated 10/29/09 12:20 pm with comments from meeting] Tozer joined Life Technologies CEO Greg Lucier and other industry executives at today’s meeting in a discussion about the clinical outlook for regenerative medicine, including some of the key issues that companies face as they bring new products to market.

Cost is one obstacle, Toser told the audience. “Innovation for the sake of innovation is not going to work,” he said, noting that regenerative medicine relies on technologies that are expensive to develop and expensive to commercialize. As a result, Big Pharma business executives are getting involved much sooner in talks with prospective biotech partners to determine if a business case can be made, even as scientific teams are evaluating a startup’s data for new drug candidates or other products under development.

Financing for startups developing stem cell-related biomedical therapies remains challenging, Tozer said recently by phone. But as he put it, the ban on federal funding for embryonic stem cell research “forced some really smart people to look at some alternatives,” and the use of endothelial cells to create pluripotent stem cells in recent years has spurred a flurry of R&D advances across a broad front of innovation.

“A lot of us who are involved with the Alliance for Regenerative Medicine are saying what we really need right now are a couple of Phase 3 trials with demonstrated success.”

The Washington, D.C.-based alliance, the chief organizer of the investor and partnering forum, was founded in 2009 to represent a variety of stakeholders—including research groups, life sciences companies, patient advocates, and others—and to focus on the obstacles to commercialization of regenerative medicine technologies, according to Michael Werner, executive director for the Alliance for Regenerative Medicine. “What became clear was there was a real need to take discoveries and turn them into products for patients,” Werner told me at the meeting.  Raising capital remains one of the biggest challenges in regenerative medicine, he added, and the forum provides a venue that brings investors and pharmaceutical partners together.

Tozer was a senior executive at Advanced BioHealing, which makes Dermagraft bio-engineered skin patches in San Diego, and is now on the lookout for additional acquisitions that fit with the company’s new strategy in regenerative medicine.

“We spent a lot of time thinking about it after we were acquired by Shire,” Tozer says. What they ultimately saw, he says, was a lot of unmet medical need around diabetes-related complications. A patient with type 1 diabetes, whose pancreas produces little or no insulin, is also susceptible to complications from microvascular deterioration, including loss of sensation (neuropathy), loss of kidney function (nephropathy), and loss of vision (retinopathy).

Dermagraft is used to treat diabetic foot ulcers that often can be serious enough to require amputation. Another product in development, Vascugel, is focused on improving blood vessel repair for patients requiring arteriovenous (AV) access, often related to dialysis.

“A lot of these problems have a lot of work going on now in regenerative medicine,” Tozer says. “It’s now one area of principal focus [at Shire] in terms of licensing and potential acquisitions.

“The biggest thing that we’re trying to get out is that we’re open for business now [in regenerative medicine],” Tozer says. “The Advanced BioHealing deal is about 18 months behind us, and we’re looking for new partnering and licensing deals.”