Mallinckrodt said it plans to acquire Stratatech, a regenerative medicine company focused on developing skin substitute products, for an undisclosed price.

The deal is designed to expand Mallinckrodt’s hospital products portfolio with developmental products that include the StrataGraft® regenerative skin tissue and a technology platform for genetically enhanced skin tissues.

StrataGraft is being developed as the first biological “off-the-shelf” skin substitute product for treatment of severe, deep, partial-thickness burns—an alternative to current standard of care for second- and third-degree burns, which requires autograft.

StrataGraft is in Phase III development for treatment of severe, deep, partial-thickness burns, with an FDA approval decision anticipated by 2020. The product is also in Phase II development for treatment of severe, full-thickness burns. StrataGraft received the FDA’s orphan designation in 2012.

Mallinckrodt and Stratatech added that the technology platform offers the potential for new products through topically applied, genetically enhanced tissues designed to produce elevated levels of natural wound healing and antimicrobial factors. The platform is in Phase I development in diabetic foot and venous leg ulcers, with other potential applications under consideration.

“We believe Stratatech’s technology has the potential to transform the standard of treatment for wound care. Additionally, the acquisition will bring world-class Stratatech researchers with deep expertise in cell-based, differentiated regenerative medicine to Mallinckrodt’s research team,” Mallinckrodt CEO and President Mark Trudeau said in a statement.

Mallinckrodt reasons that Stratatech’s progenitor keratinocyte technology platform provides potential for new products through genetically enhanced tissues, applied topically, that produce elevated levels of natural wound healing and antimicrobial factors.  StrataGraft is in Phase I development in diabetic foot and venous leg ulcers, with other potential applications being considered.

“In our next phase of development, the unique cell line used to produce living tissue in StrataGraft can also be genetically modified to potentially increase production of a variety of factors to support and promote wound healing, such as antimicrobial and vascular endothelial growth factors. This could offer utility in a number of skin injury settings beyond burns,” added Stratatech CEO Lynn Allen-Hoffmann, Ph.D.

Dr. Allan-Hoffman founded privately held Stratatech in 2001, telling GEN 8 years later that she was inspired to pursue tissue engineering while watching a patient with third-degree burns covering 95% of his body receive painful grafts of his own skin: “That was my epiphany day, when I refocused my efforts to develop a cell line that could be clinically useful.”

Mallinckrodt said its planned acquisition of StrataSys will result in “slight” dilution to the company’s near- and longer-term adjusted diluted earnings per share. However, the buyer did not offer guidance concerning the effect of the deal on its GAAP diluted EPS “due to the inherent difficulty of forecasting the timing or amount of items that would be included in calculating such impact.”

The deal is expected to close later in the second half of this year, subject to customary closing conditions.