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SD at Center of Shire’s Plan for Regenerative Medicine Business

Xconomy San Diego — 

Shire plans to spend more than $100 million to develop a new campus in San Diego, where the Irish specialty pharmaceutical wants its regenerative medicine acquisitions to coalesce into a $1 billion business, according to Kevin Rakin, Shire’s Regenerative Medicine President.

“We believe we’re on the front lines in a new era [with regenerative medicine],” says Rakin. “We’re one of the few commercially oriented companies. A lot of other companies are doing [research] and early stage [development], and we want to be the partner of choice that figures out how to scale up manufacturing, and how to commercialize.”

Earlier this week, Shire (NASDAQ: SHPGY) said it plans to build a 150,000 square-foot facility in San Diego that would combine manufacturing, corporate offices, and lab space for Advanced BioHealing (ABH), the San Diego-based company that Shire acquired last year for $750 million. Rakin was the Westport, CT-based CEO of Advanced BioHealing (ABH) before the acquisition, and he now oversees ABH as part of Shire’s broader initiative in regenerative medicine.

Construction of Shire’s new San Diego facility, which is expected to begin next year, will double current production of Dermagraft, the bioengineered living skin that ABH developed to treat diabetic skin ulcers. The initial expansion is expected to generate several hundred new jobs in San Diego, and could grow bigger over time—much bigger. Shire’s 28-acre site is big enough to accommodate 800,000 square feet of facilities.

“It’s a campus with the ability to add additional manufacturing parts,” Rakin says. “As we see other products coming through development, we can add manufacturing lines, or buildings, so it’s relatively modular.” The cost is yet-to-be-determined, but it will be “well over $100 million,” he says.

“Shire made a substantial investment in acquiring us, and now they’re making another substantial investment in building us out,” says Rakin. In five to seven years, he adds, “We want to be a billion-dollar part of Shire. That absolutely is the goal, to build the leading player, or one of the leading players, in regenerative medicine.”

Biocom CEO Joe Panetta says he regards regenerative medicine as a diverse and growing sector, and part of San Diego’s future in life sciences. “The average biotech company in San Diego has 50 employees, so [Shire’s] expansion is big from a jobs standpoint,” Panetta says. “They would be in an upper tier of large companies, but below the thousands that CareFusion (NASDAQ: CFN) and Life Technologies (NASDAQ: LIFE) have.”

Kevin Rakin

The region has a half-dozen emerging companies like Stem Cells and International Stem Cell, and Panetta also sees a growing cluster of basic stem cell research in San Diego. The Sanford Consortium for Regenerative Medicine opened this year as a partnership between The Sanford-Burnham Medical Research Institute, U.C. San Diego, the La Jolla Institute for Allergy & Immunology, the Salk Institute, and the Scripps Research Institute.

In laying out Shire’s strategy, Rakin described Dermagraft as Shire’s “flagship product” in regenerative medicine. So part of the strategy involves looking at other markets for Dermagraft, and determining if the living skin patch also would be suitable for treating other types of sores. The next product would be “Vascugel,” an experimental vascular repair technology (currently in mid-stage trials) that came with Shire’s acquisition of Cambridge, MA-based Pervasis two months ago. “Those are our two products, but we’re out there scouting for additional [products,]” he adds. “The could be licenses, they could be acquisitions, they could be programs.”

Vascugel is being investigated as a way to improve hemodialysis access for patients with end-stage renal disease. But Vascugel still faces late-stage clinical trials as well as the trials that go with submitting a new drug application to the FDA. If those steps prove successful, Rakin says he plans to move Vascugel manufacturing to San Diego.

Rakin cited Shire’s $1.6 billion acquisition of Transkaryotic Therapies (TKT), a Boston-area startup now known as Human Genetic Therapies (HGT) as a paradigm for building the regenerative medicine business. “Shire’s kind of got a history of acquiring base businesses in interesting future areas of medicine, and then building up around that,” Rakin says. Today, HGT is a leading player in replacement therapy for rare genetic diseases.

“Really, the skills that Shire brought to them, which they are now bringing to regenerative medicine, are scale-up of manufacturing, doing additional M&A [mergers & acquisitions], doing further development, and global expansion of the product or products.” Like San Diego’s ABH, TKT was generating “a couple hundred million in revenue when they bought it, and [seven] years later, it’s well over $1 billion,” Rakin says.

In San Diego, he adds, “We have a nice base business, but what we can do with Shire, again, is ramp-up manufacturing, expand globally, and acquire additional products. To do all that, we need additional infrastructure. We’re in quite a few different buildings now, we need to kind of bring everybody together on one campus, and we need additional capacity.”