Shire Executes Agreement to Divest DERMAGRAFT®

                Shire Executes Agreement to Divest DERMAGRAFT®

PR Newswire

DUBLIN, January 17, 2014

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.

Lazard and Davis Polk & Wardwell LLP acted as advisors to Shire.

Reference:

(1) The annual net sales targets range from as low as $70 million in calendar
years 2014 and 2015 to as high as $250 million. For the purposes of
determining the reported loss on disposal, the fair value of these contingent
payments is estimated at approximately $30 million.

NOTES TO EDITORS

Shire enables people with life-altering conditions to lead better lives.

Our strategy is to focus on developing and marketing innovative specialty
medicines to meet significant unmet patient needs.

We provide treatments in Neuroscience, Rare Diseases, Gastrointestinal,
Internal Medicine and Regenerative Medicine and we are developing treatments
for symptomatic conditions treated by specialist physicians in other targeted
therapeutic areas.

http://www.shire.com

About Dermagraft
DERMAGRAFT is a cryopreserved human-fibroblast -derived dermal substitute; it
is composed of fibroblasts, extracellular matrix, and a bioabsorbable
scaffold. DERMAGRAFT is indicated for use in the treatment of full-thickness
diabetic foot ulcers greater than six weeks duration, which extend through the
dermis, but without tendon, muscle, joint capsule, or bone exposure.
DERMAGRAFT should be used in conjunction with standard wound care regimens and
in patients that have adequate blood supply to the involved foot. DERMAGRAFT
is contraindicated for use in ulcers that have signs of clinical infection or
in ulcers with sinus tracts. DERMAGRAFT is contraindicated in patients with
known hypersensitivity to bovine products, as it may contain trace amounts of
bovine proteins from the manufacturing medium and storage solution. The most
frequently reported adverse events experienced by patients in the DERMAGRAFT
group of the pivotal registration trial (terms ≥ 5%) included infection,
accidental injury, skin dysfunction/blister, flu syndrome, osteomyelitis,
surgeries involving study ulcer, wound enlargement/skin ulcer, cellulitis and
peripheral edema/localized swelling. Refer to DERMAGRAFT Directions for Use
for more information.

FORWARD - LOOKING STATEMENTS - "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Statements included in this announcement that are not historical facts are
forward-looking statements. Forward-looking statements involve a number of
risks and uncertainties and are subject to change at any time. In the event
such risks or uncertainties materialize, Shire's results could be materially
adversely affected. The risks and uncertainties include, but are not limited
to, that:

  oShire's products may not be a commercial success;
  orevenues from ADDERALL XR are subject to generic erosion;
  othe failure to obtain and maintain reimbursement, or an adequate level of
    reimbursement, by third-party payors in a timely manner for Shire's
    products may impact future revenues and earnings;
  oShire relies on a single source for manufacture of certain of its products
    and a disruption to the supply chain for those products may result in
    Shire being unable to continue marketing or developing a product or may
    result in Shire being unable to do so on a commercially viable basis;
  oShire uses third party manufacturers to manufacture many of its products
    and is reliant upon third party contractors for certain goods and
    services, and any inability of these third party manufacturers to
    manufacture products, or any failure of these third party contractors to
    provide these goods and services, in each case in accordance with its
    respective contractual obligations, could adversely affect Shire's ability
    to manage its manufacturing processes or to operate its business;
  othe development, approval and manufacturing of Shire's products is subject
    to extensive oversight by various regulatory agencies and regulatory
    approvals or interventions associated with changes to manufacturing sites,
    ingredients or manufacturing processes could lead to significant delays,
    increase in operating costs, lost product sales, an interruption of
    research activities or the delay of new product launches;
  othe actions of certain customers could affect Shire 's ability to sell or
    market products profitably and fluctuations in buying or distribution
    patterns by such customers could adversely impact Shire's revenues,
    financial conditions or results of operations;
  oinvestigations or enforcement action by regulatory authorities or law
    enforcement agencies relating to Shire's activities in the highly
    regulated markets in which it operates may result in the distraction of
    senior management, significant legal costs and the payment of substantial
    compensation or fines;
  oadverse outcomes in legal matters and other disputes, including Shire's
    ability to obtain, maintain, enforce and defend patents and other
    intellectual property rights required for its business, could have a
    material adverse effect on Shire's revenues, financial condition or
    results of operations;

and other risks and uncertainties detailed from time to time in Shire's
filings with the U.S. Securities and Exchange Commission, including its most
recent Annual Report on Form 10-K.

For further information please contact:

Investor Relations

Eric Rojas
erojas@shire.com
+1-781-482-0999

Sarah Elton-Farr
seltonfarr@shire.com
+44-1256-894157

Media

Jessica Mann
jmann@shire.com
+44-1256-894-280

Gwen Fisher
gfisher@shire.com
+1-484-595-9836



SOURCE Shire plc
 
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