Shire plc pumped up its regenerative medicine business by acquiring all but the oncology assets of privately held Pervasis Therapeutics Inc., which is developing an endothelial cell-based technology, in a deal valued at up to $200 million.

Shire, of Dublin, Ireland, will make an undisclosed up-front payment plus potential milestone payments predicated on the achievement of clinical development, regulatory and sales targets.

"We like these kinds of success-based, share-the-risk deals," said Kevin Rakin, CEO of Advanced BioHealing (ABH), the regenerative medicine firm Shire acquired last year and operates as a separate business unit.

The price tag is a fraction of the $750 million cash deal for ABH, which set the large pharma's regenerative medicine business in motion. (See BioWorld International, May 25, 2011.)

Those circumstances were quite different, since Shire snagged ABH as it was set to complete an initial public offering, but Rakin acknowledged the acquisition of Cambridge, Mass.-based Pervasis complemented the earlier deal.

As fellow CEOs in the regenerative medicine community, Rakin was well acquainted with Frederic Chereau, president and CEO of Pervasis. Even before the Shire acquisition, "we'd been intrigued by what Pervasis was doing," Rakin said. Those conversations heated up over the last several months, he added.

Pervasis' cell-based technology platform is a potential global opportunity that leverages many of Shire's existing capabilities, including the specialized sales and marketing, manufacturing scale-up and reimbursement expertise needed to commercialize a regenerative medicine platform, Rakin explained.

"We want to do these kinds of partnerships, licenses and acquisitions with venture-backed companies where you have an interesting cell platform, you've got proof in man and you've gotten to a Phase II stage," Rakin said. "We can apply our skill set to get the technology over the finish line."

Pervasis' lead program, Vascugel, is designed to address the unmet medical need for acute vascular repair technologies by improving arteriovenous (AV) access for hemodialysis patients with end-stage renal disease (ESRD). Currently, no approved therapies directly target the underlying physiological processes associated with the creation of AV access sites in hemodialysis patients, including inflammation, thrombosis and restenosis.

Vascugel contains adult allogeneic endothelial cells embedded in a polymer matrix, which is placed on the outside of the blood vessel at the AV access site during the surgery to create the access.

Up to 60 percent of AV grafts require re-intervention after one year, according to Pervasis, with AV access failure the most common reason for hospitalization among hemodialysis patients. Vascugel could reduce the need for re-intervention by helping to regulate the body's healing response following the creation of an AV graft or fistula.

"When you talk to dialysis centers, this challenge of maintaining dialysis access through an AV graft or fistula is a huge unmet need, and the dialysis population is growing," Rakin said.

Vascugel has received orphan drug designation from the FDA and the European Medicines Agency.

Rakin said the technology also represented a strong strategic fit with Dermagraft, a fibroblast-derived skin substitute originally developed by Advanced Tissue Sciences Inc. that was later sold to Smith & Nephew plc before ABH picked up the compound in 2007. Dermagraft is approved for diabetic foot ulcers, though Shire scrapped plans to expand the label into venous leg ulcers after the compound failed to meet the primary endpoint in a Phase III trial last year. (See BioWorld International, Aug. 31, 2011.)

The Pervasis buy also gives Shire a technology relationship with co-founder Elazer Edelman, a professor of health sciences and technology at MIT, professor of medicine at Harvard Medical School and coronary care unit cardiologist at the Brigham and Women's Hospital in Boston. Rakin described Edelman, who sits on Pervasis' board and scientific advisory board, as a "world-class expert in using endothelial cells to address vascular issues." That type of expertise is needed to help Shire move the Pervasis technology beyond a single indication, Rakin said.

Shire will focus on completing the clinical program for Vascugel in AV access for hemodialysis patients before determining the next steps.

Pervasis published positive Phase I/II results of Vascugel in the December 2009 issue of the Journal of Vascular Surgery. Those results showed Vascugel was well tolerated, with no difference in early complication rates between the treatment and placebo groups at four weeks and a trend for improved primary patency at 24 weeks compared to placebo.

The company subsequently raised $17 million in a venture round and reached agreement with the FDA on the design of a single, pivotal Phase III study of Vascugel, but it never moved forward, citing the desire to out-license the program to a partner.

Founded in 2003, Pervasis previously had raised more than $13 million from venture investors, including founding investors Polaris Venture Partners and Flagship Venture Partners as well as Highland Capital Partners and the Richter Family Fund.

Though the effort to attract a suitor took longer than expected, Chereau was delighted with the deal, calling Shire "the perfect partner to develop our endothelial technology."

Shire now assumes full responsibility for developing the bulk of Pervasis' assets, including the PVS-10200 program in peripheral artery disease.

A much slimmer Pervasis retains and will continue to pursue its early stage oncology assets, Chereau noted.

Meanwhile, Shire continues its string of selective buys. Last month the pharma picked up FerroKin BioSciences Inc. for $100 million up front plus potential milestone payments of up to $225 million. That acquisition added FerroKin's iron chelator candidate FBS0701 to a hematology franchise that includes Xagrid and a growing development pipeline.

Shire also inked an option for $190 million plus royalties on an A2A antagonist discovered by privately held Heptares Therapeutics Ltd., of Welwyn Garden City, UK. (See BioWorld International, March 21, 2012.)

Shire seems content with that approach. Although the "big picture" of regenerative medicine is starting to come into focus after a decade of fits and starts, bridging the science into true clinical applications that can gain approval as well as reimbursement remains a challenge, Rakin maintained.

"That's where Pervasis hit a sweet spot for us – cutting-edge science, very good early clinical data and a true clinical need in hemodialysis access," he said.