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Catalent preps for complex therapy boom with $1.2bn Paragon buy

Reflects growing investment in cell and gene therapies

Catalent

Catalent has agreed a deal to buy Paragon Bioservices, a contract development and manufacturing organisation that specialises in complex biopharmaceuticals.

The $1.2bn all-cash deal will give Catalent an immediate boost in specialised medicines like cell and gene therapies, at a time when drugmakers are investing heavily to bring these new drugs through the development pipeline and onto the market.

Paragon, which is backed by private-equity firms Camden Partners and NewSpring Capital, helps its clients develop and produce gene therapies, next-generation vaccines, and other complex biopharmaceuticals such as oncolytic viruses and CAR-T cell therapies, which Catalent says is “one of the fastest-growing areas of healthcare.”

The CDMO has a 25-year history in the production of gene therapies, including adeno-associated virus (AAV) vectors, the most commonly used delivery system, as well as plasmids and lentivirus vectors, and 50% of all its work is in the gene therapy area. It is predicting sales of around $200m in 2019.

That’s tiny in comparison to Catalent’s near $2.5bn in revenues last year from the sale of softgel capsules, biologics and specialty drug discovery, oral drug delivery and clinical supply services, but takes the outsourcing giant into a new and emerging category that is estimated to develop into a $40bn market in the coming years.

The deal comes amid something of a gene therapy buying spree among big pharma companies trying to get a position in the market.

Last month, Pfizer paid around $640m for a 15% stake in Vivet Therapeutics, while Biogen snapped up Nightstar Therapeutics for $800m and Roche acquired Spark Therapeutics in February for $4.3bn. And in 2018, Novartis’ bought AveXis for $8.7bn to lay claim to Zolgensma, a gene therapy for spinal muscular atrophy (SMA), while in 2016 Pfizer paid $645m for Bamboo Therapeutics.

The FDA said recently that it expects to receive up to 200 applications to start gene and cell therapy trials every year from 2020.

“Paragon’s unparalleled expertise in the rapidly growing market of gene therapy manufacturing will be a transformative addition to our business that we believe will accelerate our long-term growth,” said Catalent chief executive John Chiminski.

“Paragon brings to Catalent a complementary capability that will fundamentally enhance our biologics business and our end-to-end integrated biopharmaceutical solutions for customers.”

Article by
Phil Taylor

16th April 2019

From: Research

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