The two companies have entered a $1.2bn (€1.02bn) all-cash merger agreement under which Catalent will purchase all of Paragon Bioservices’s equity
Catalent, a contract development and manufacturing organisation (CDMO), signed the deal as it looks to boost its adeno-associated viral (AAV) vectors, lentivirus vectors, and plasmid development and manufacturing capabilities.
In a statement, Catalent pointed to the potential for the gene therapy market to become worth $40bn and revealed that Paragon is currently projected to bring in more than $200m in revenue in full-year results in 2019.
However, a spokesperson for Catalent told us that is looking to invest heavily once the acquisition completes: “The next stage of Paragon’s growth will require substantial capital investments. Catalent is committed to making the necessary investments and has the expertise to assure smooth execution.”
One immediate investment that will be made will see the addition of 125 staff members to the Paragon’s existing team of 380.
The deal is expected to close in the second quarter of this year.
Sign of the times
Catalent’s investment in the gene therapy market comes at a time when there are a growing number of gene therapy treatments in the pipeline, and an associated increased demand for AAV vectors.
The spokesperson for Catalent confirmed what those working in the biotech industry have already spoken of – increased demand is outstripping supply of vectors, which makes now an “ideal time for Catalent to enter the space.”
“Paragon brings to Catalent complementary capabilities that will fundamentally enhance our biologics business and our end-to-end integrated biopharmaceutical solutions for customers,” the spokesperson added.
Catalent move follows similar decisions at the larger end of the CDMO industry, with Thermo Fisher Scientific making a $1.7bn acquisition of Brammer Bio, at the end of last month, and Pall Biotech recently announcing plans to create further cell and gene therapy sites.
The motivation for the former acquisition was to develop Thermo Fisher’s viral vector production capabilities, according to the company.
With supply for viral vectors limited, some biotech companies have chosen to invest in their own; this month, Bluebird bio announced the opening of its own lentiviral vector manufacturing facility.