Stratatech Corp., whose human skin tissue products are used to heal severe burns, is now part of Mallinckrodt Pharmaceuticals, based in the United Kingdom.
The acquisition was completed Wednesday; terms were not disclosed. But Stratatech will remain in Madison and will keep all of its 55 jobs, CEO and founder Lynn Allen-Hoffmann told the Wisconsin State Journal.
“We are staying here in Madison,” said Allen-Hoffmann, who will continue to lead the local operation. “It’s been a fabulous journey and we’re still on it.”
In her first interview since the acquisition was announced nearly three weeks ago, Allen-Hoffmann talked about the future of Stratatech, and she said several companies were vying to buy the Madison biotech this year.
Mallinckrodt, which already sells its products to hospitals and burn centers, is “a fabulous fit,” she said.
The deal is “exciting news for our state,” said Lisa Johnson, CEO of BioForward, the organization representing Wisconsin’s health research industry. “It demonstrates the value that is seen in the global marketplace on the strength of our regenerative medicine companies,” Johnson said.
Wisconsin is known for its strong research base and talented workers, added Tom Still, president of the Wisconsin Technology Council. “Those kinds of resources aren’t easily duplicated elsewhere. It makes sense for Mallinckrodt to keep Stratatech and its employees here,” he said.
Origins in UW laboratory
Stratatech’s lead product is StrataGraft, skin tissue made from human skin cells, designed to heal and close the wounds of patients with serious burns instead of using grafts of their own skin.
StrataGraft came about when a human skin cell line did not stop dividing, as skin cells usually do, in tests in Allen-Hoffmann’s UW-Madison research lab. She called it “serendipitous” and founded Stratatech in 2000, impassioned after watching the painstaking and painful process of applying grafts of a farmer’s own skin to his badly burned body.
After years of development, a report released in March 2015 said clinical tests on 28 patients with deep burns showed StrataGraft completely closed the wounds of 27 of them within three months; the other patient was 85 percent healed. The tissue used on 10 of the patients had been frozen, showing StrataGraft also has an extended shelf life.
Months later, the company won a major contract with BARDA, the U.S. Department of Health and Human Services’ Biomedical Advanced Research and Development Authority. The Project BioShield contract could pay the company up to $247 million over five years — mainly because the government wants to stockpile the tissue in case of a nuclear attack by terrorists.
That contract spurred interest by potential acquirers, Allen-Hoffmann said. She declined to say how many or which ones. The courtship with Mallinckrodt was “relatively quick,” she said.
In fact, it was a previous contract with BARDA in 2013 that prompted efforts by some — she wouldn’t give names — to move Stratatech’s operations to an East Coast contract manufacturer. Letters from Mayor Paul Soglin, Gov. Scott Walker, Sen. Tammy Baldwin, and UW officials helped ward off the move, she said.
“The human talent is right here in Madison and that has been and remains critical to our efforts,” Allen-Hoffmann said.
Room to grow
Stratatech will take over a larger space at the MGE Innovation Center in University Research Park, at 510 Charmany Drive, and will start manufacturing its StrataGraft tissue there. For many years, the skin tissue has been produced at the Waisman Biomanufacturing facility at UW-Madison, she said.
She said the company will likely add staff but could not project how many or how quickly.
Stratatech will start its third round of patient tests using StrataGraft by early 2017 and expects at least twice as many sites as the six used in the last trials, Allen-Hoffmann said. UW-Madison is expected to be one of the locations.
The BARDA contract provides funds to include children and aging adults in the tests, “two important populations,” Allen- Hoffmann said.
While it’s hard to project a timeline, she said she hopes to apply for U.S. Food and Drug Administration approval as soon as possible. “We have a sense of urgency with getting our product to patients,” she said.
Mallinckrodt will be a good partner because it is a “high-caliber organization” devoted to finding treatments for patients “in areas of high unmet medical need, and that is part of our mission,” Allen-Hoffmann said.
Publicly traded Mallinckrodt, with sales of $3.3 billion and 5,700 employees, also owns Ikaria, a company that makes treatments for neonatal critical care and has employees in Madison, as well, BioForward’s Johnson said.