Catalent Completes Acquisition of Gene Therapy Leader for $1.2 Billion

Catalent, Inc. recently announced it has completed the $1.2-billion acquisition of Paragon Bioservices, Inc., a leading viral vector development and manufacturing partner for gene therapies.

With the addition of Paragon’s specialized expertise in adeno-associated virus (AAV) vectors, the most commonly used vector to deliver DNA to cells, Catalent is positioned to capitalize on strong industry tailwinds in the potentially $40-billion addressable market for gene therapies. Paragon also brings to Catalent its unique and differentiated scientific, development, and manufacturing capabilities, which will fundamentally enhance Catalent’s biologics business and end-to-end integrated biopharmaceutical solutions for customers.

Paragon recently announced the opening of its new, state-of-the-art commercial manufacturing center near the Baltimore-Washington International (BWI) airport, which is equipped with several 500-liter and 2,000-liter single-use bioreactors for clinical through commercial material production. The new large-scale production campus – now combined with a recently leased second building which will be built out for commercial GMP manufacturing – has the potential for more than 425,000 square feet of manufacturing space upon completion.

Paragon has GMP manufacturing projects underway with more than half of the top 40 leading gene therapy developers worldwide. Catalent is committed to continuing the resource dedication for Paragon’s customers and maintaining a flexible and reliable development and manufacturing partnership for its clients. The company currently employs over 380 individuals at its two Baltimore-area sites, all of whom will join the existing Catalent team of over 11,000 employees.

In connection with the acquisition of Paragon, Catalent Pharma Solutions, Inc., as borrower, and certain other wholly owned subsidiaries of Catalent entered into an amendment, dated as of May 17, 2019, to its existing credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, to provide for, among other things, $950 million of incremental term loans and a $350 million increase to its revolving credit facility. The proceeds of the incremental term loans were used to fund a portion of the acquisition consideration and for general working capital purposes, to pay fees, costs, and expenses incurred in connection with the transactions contemplated hereby, for capital expenditures of Paragon and to prepay a portion of the existing term loans.

Also in connection with the acquisition of Paragon, Catalent completed the issuance of $650 million of a new series of convertible preferred stock to funds affiliated with Leonard Green & Partners, L.P.  Effective as of the closing of the acquisition, Peter Zippelius, a partner at Leonard Green & Partners, joined Catalent’s Board of Directors.

Catalent is the leading global diversified provider of advanced delivery technologies and development solutions for drugs, biologics, and consumer health products. With more than 85 years serving the industry, Catalent has proven expertise in bringing more customer products to market faster, enhancing product performance and ensuring reliable clinical and commercial product supply. Catalent employs over 11,000 people, including over 1,800 scientists, at more than 30 facilities across five continents, and in fiscal year 2018 generated approximately $2.5 billion in annual revenue. Catalent is headquartered in Somerset, NJ. For more information, visit www.catalent.com.

Catalent Biologics provides advanced technologies and integrated solutions for biologic development and manufacturing, including antibody-drug conjugates (ADCs), bi- and multi-specific antibodies, biosimilars, and gene therapies, from DNA to fill/finish and commercial supply. With more than 20 years’ experience, Catalent Biologics has worked with 600+ monoclonal antibodies and 80+ recombinant proteins with 115+ clinical trials in progress and 11 marketed products utilizing GPEx cell line engineering technology, and 20 commercially approved products through fill/finish. For more information, visit www.catalent.com/biologics.