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Shire plc (SHPG - Analyst Report) recently announced that the company has initiated a phase III study to evaluate the efficacy and safety of Dermagraft for the treatment of non-healing wounds in patients suffering from epidermolysis bullosa (EB).

EB refers to a group of rare genetic skin disorders which currently have no approved therapies as per Shire.

The company intends to enrol approximately 20 patients (aged three years and above) suffering from generalized EB at around 10 to 15 sites across the US, Europe and Canada.

Dermagraft has been granted an orphan drug designation in the US and EU for the EB indication.

In addition, Dermagraft enjoys a Fast Track designation from the US Food and Drug Administration (FDA) for the same indication.

The designation primarily facilitates the development and expedites the review of drugs and biologics, which cater to medical needs with no approved medication.

Moreover, Shire also stated that the European Medicines Agency's Pediatric Committee has agreed on a pediatric investigation plan for Dermagraft for treating patients suffering from EB.

We note that Dermagraft is currently approved in the US for the treatment of diabetic foot ulcers (DFU).

We remind investors that Dermagraft received approval from Health Canada as a class IV medical device for the treatment of DFU in Sep 2012.

Shire plans to make Dermagraft available in Canada shortly. 

Additionally, Shire is developing an intravenous protein replacement therapy for the treatment of dystrophic EB, through its Human Genetic Therapies business, which it recently acquired from Lotus Tissue Repair, Inc.

Dermagraft product sales were down 33% y/y in the third quarter of 2012 to $34 million. The successful development and commercialization of Dermagraft for the EB indication should boost the sales potential of Dermagraft.

Shire currently carries a Zacks Rank #3 (Hold). Pharma stocks such as Bayer (BAYRY - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and Sanofi (SNY - Analyst Report) currently look attractive with a Zacks Rank #2 (Buy).

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