April 14, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Switzerland-based Lonza Group AG , a contract research organization (CRO), is rumored to be in talks to acquire Somerset, N.J.-based Catalent , according to at least three unidentified inside sources.
Catalent jumped at the news. It’s been fairly volatile this last year and had a low of $20.86 on Feb. 10, but is currently trading for $30.27. However, it traded for $34.29 on Aug. 18, 2015.
Deutsche Bank analysts said, according to Seeking Alpha, “We believe Catalent would be interested in a transaction, either as a target or an acquirer/merger partner, and would like to see the business as part of a larger company to smooth any volatility in the business.”
Apparently the two companies, according to the Reuters report, have not agreed on a price and there’s always the possibility the deal will fall through. Lonza has been growing in the U.S. In 2011, it acquired Arch Chemicals for $1.4 billion.
On Feb. 8, Lonza announced a deal with Palo Alto, Calif.-based Kodiak Sciences. Lonza will manufacture clinical supplies related to Kodiak’s drugs under development for retinal disease.
“Our manufacturing requirements are technical, demanding tight coordination across multiple global sites and the highest quality people, materials, and capabilities,” said Victor Perlroth, chairman and chief executive officer of Kodiak, in a statement. “With Lonza, we have secured the support of one of the largest contract manufacturers of biologics and chemicals in the world. It was critical to choose a reliable, reputable contract manufacturer that understands our technical challenges and has commercial expertise with marketed antibody conjugate medicines.”
The materials will be manufactured at several sites run by Lonza, including Slough, UK, Visp, Switzerland and Nansha, China.
Catalent reported more than $1.8 billion in revenue in 2015. It offers advanced delivery technologies and development solutions for drugs, biologics, and various consumer health products. It has 31 facilities around the world. In 2007 Catalent, which was owned by Cardinal Health , was bought by private equity firm Blackstone Group LP (BX) for $3.3 billion. In 2014, Blackstone took Catalent public, but still controls about 20 percent of the company.
“This sort of combination would make strategic sense,” John Kreger, an analyst with William Blair, wrote in a recent research note. “Catalent is a market leader in a number of advanced drug delivery technologies—particularly for small molecules.”
Kreger went on to write that, “Lonza, in contrast, is a leader in contract biologic manufacturing, (but) the company has relatively little exposure to biologics, and this has been noted as a key merger-and-acquisition target.”
Kreger also projects a reasonable per share take-out price would be $35, which would give Catalent a value of about $1.5 billion.
For its part, on Feb. 2, Catalent Pharma Solutions announced it was investing $4.6 million to expand its Singapore clinical supply facility. It was going to build a new flexible GMP space for secondary packaging, which would double its ambient storage space and quadruple cold storage capacity. It expects to help support the growth of its clients’ clinical trial operations in the Asia-Pacific region.
“Our Singapore facility is fully approved by the Health Science Authority for GMP across all its activities,” said Wetteny Joseph, Catalent’s president of clinical supply services, in a statement. “Customer demand at the site has increased by 30 percent over last year, and this expansion, coupled with our recently announced opening of a facility in Japan, will allow Catalent to better support multinational customers’ growing trial’s needs, while providing more flexible solutions for local customers in the region.”
