U.S. Markets open in 2 hrs 30 mins

Catalent Agrees To Buy Gene Therapy-Focused CDMO Paragon Services For $1.2B

Shanthi Rexaline

Gene therapy deal news continues to trickle in after Catalent Inc (NYSE: CTLT) announced an agreement to buy another gene and cell therapy CDMO.

Catalent, which provides technologies and integrated solutions for biologic and biosimilar development, said it has entered into a definitive agreement to buy Paragon Services, a viral vector development and manufacturing partner for gene therapies, for $1.2 billion in cash.

Catalent expects to fund the transaction partly from its existing credit facilities and partly from an issuance of preferred equity.

The deal is expected to close in the second quarter of 2019.

Why It's Important

With gene therapy emerging as a key therapeutic option, this deal is likely to help Catalent gain a foothold in the gene therapy manufacturing market, providing scope for accelerated long-term growth.

"Paragon brings to Catalent a complementary capability that will fundamentally enhance our biologics business and our end-to-end integrated biopharmaceutical solutions for customers," said John Chiminski, Catalent CEO.

Although accounting for a small percentage of Catalent's business in the near term, Paragon is expected boost its revenue and EBITDA growth over time. Paragon is estimated to achieve $200 million in revenue in 2019, with 90 percent of this revenue target already from signed contracts.

On top of this, the gene therapy market as such is likely to see a sustained growth of 25 percent in the medium term.

Catalent expects the deal to be accretive to its adjusted net income per share in the second full fiscal year after closing and significantly accretive thereafter.

Related Links:

The Week Ahead In Biotech: Conferences, Clinical Trial Readouts, Earnings And IPOs

Goldman Adds EXACT Sciences To Americas Conviction List

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.