Contract manufacturer Catalent has agreed to buy the gene therapy CDMO Paragon Bioservices for $1.2 billion.
Paragon Bioservices, a private-equity backed biologics contract development and manufacturing organization (CDMO) focused on gene therapy and next-generation vaccines, will be acquired by fellow CDMO Catalent, the firms announced this morning.
According to its website, 50% of Paragon’s current contracts are for gene therapy. The CDMO also supports vaccine products and has previously won contracts from clients including the US Department of Defense (DoD).
“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,” Catalent CEO John Chiminski said.
“Paragon brings to Catalent a complementary capability that will fundamentally enhance our biologics business and our end-to-end integrated biopharmaceutical solutions for customers.”
The deal brings viral vector manufacturing capabilities to Catalent, complementing its biologics production capacity in Wisconsin and Indiana, with a 200,000 square-foot GMP gene therapy biomanufacturing facility in Anne Arundel County, Maryland.
The facility is equipped with 500 L and 2,000 L single-use bioreactors for clinical through commercial material production, supporting Paragon’s customers, of which it claims to serve 20 of the top 40 gene-therapy biopharmaceutical companies.
The deal is expected to close in the second quarter of 2019.
Jefferies analyst David Windley suggested the acquisition is the continuation of Catalent’s M&A growth strategy in a note to investors.
“Catalent has been acquiring steadily to add capabilities to its platform. In that regard, Paragon fits nicely in that strategy. Gene therapy as a therapeutic approach has achieved the validation (de-risking) of a US approval for Luxturna (Spark Therapeutics). Catalent has invested aggressively (organic and inorganic) in its large molecule manufacturing capabilities. Paragon would add yet another platform.”
In September 2017, the CDMO acquired Bloomington, Indiana-based drug substance and drug product manufacturer Cook Pharmica for $950 million, significantly expanding its biologics capabilities. The recent acquisition of delivery tech and development solutions firm Juniper Pharmaceuticals for $150 million has also expanded Catalent’s small molecule business.
With demand for cell gene therapy manufacturing capabilities currently outstripping supply, the news is the latest example of third-party gene therapy consolidation. Last month, Thermo Fisher paid $1.7 billion to buy viral vector manufacturer Brammer Bio. Lonza, meanwhile, has acquired PharmaCell and a major stake in cell therapy partner Octane Biotech, while Hitachi Chemical recently paid $86 million for German cell therapy manufacturing firm apceth Biopharma.