Shire has paid $825m (£414m) for the rights to a potential treatment for scarring, a drug which enters the last stage of clinical trials next year.
The deal sees the biopharmaceutical company acquire the rights outside Europe to Juvista, Renovo's drug to prevent and reduce scarring. Shire is to make an upfront payment of $125m, which includes $75m in cash and $50m in equity, to acquire around 7% of Renovo.
Juvista enters the last stage of clinical trials next year. It is injected on the side of a wound before or after surgery, and is the only such product at this stage of development.
Samir Devani, an analyst at Nomura Code, said the treatment had so far generated "statistically significant efficacy" in reducing scarring in four different clinical trials.
Juvista has possible sales of up to $4bn a year in the US alone, although analysts forecast more conservative peak sales of just over $1bn.
Analysts at Goldman Sachs said: "Shire has the opportunity to build a franchise in cosmetic and general surgery application with Juvista in a manner analogous to how Allergan grew its franchise with Botox."
Shire will give Renovo another $25m when and if it files the drug with the US Food and Drug Administration, and will award a further $50m to $150m if the FDA grants approval, depending on what is on the label of the treatment. There is then an additional $525m to be given out depending on the level of sales achieved.