Catalent cites biologics as growth driver and forecasts COVID gains in 2021

Catalent says investments in biologics – particularly in the cell and gene therapy space – drove Q4 gains and positioned it as the “go to” COVID CDMO.

Catalent’s revenue for the three months ending June was $947.6 million, up 31% on the comparable quarter last year.

The contract development and manufacturing organization (CDMO) made a number of purchases in the cell and gene therapy space in recent years. In February, it bought Masthercell from Orgenesis and in 2019 it acquired the gene therapy contractor Paragon Bioservices for $1.2 billion.

Image: iStock/Roman Valiev

Catalent said Q4 growth was “partially driven by the acquisitions of the cell and gene therapy businesses as well as the acquisition of Bristol-Myers Squibb’s biologics, sterile, and oral solid dose product manufacturing and packaging facility in Anagni, Italy, and was partially offset by the divestiture of a manufacturing facility located in Braeside, Australia.”

The CDMO’s oral and specialty delivery revenue also grew in the period, increasing 2% to $291.2 million.

The gains were partially offset by flat clinical supply chain revenue, which was $83.6 million for the quarter.

CFO Wetteny Joseph told analysts “The disruption of clinical trials due to the COVID-19 pandemic impacted the distribution and packaging businesses, but this was partly offset by growth in the storage business.”

COVID-19 revenues

Treatments for COVID-19 and vaccines for SARS-Cov-2, the virus that causes the disease, made a limited contribution, “roughly $20 million” according to Catalent.

However, a pandemic world is likely to be a major driver in future according to CEO John Chiminski, who said investments had made it the “go-to company for potential COVID-19 vaccines and treatments.”

“We have already been awarded work on more than 50 COVID related compounds across all four of our business segments and are currently involved in client discussions regarding over 100 additional opportunities.”

He cited Humanigen’s investigational monoclonal antibody, which was developed using Catalent’s GPEx cell line technology, as well as vaccine work the CDMO is doing for Johnson & Johnson, Moderna and AstraZeneca as examples.

“The strategic investments we have made over the last few years, in addition to recent and ongoing investments, made in concert with certain strategic customers have enabled Catalent to be in a position to provide multi-dose vial filling manufacturing capability and capacity for potentially billions of COVID-19 vaccine doses over the next few years.”

Bloomington expansion

In related news, Catalent has announced plans to spend $50 million on an additional high-speed vial filling line at its Bloomington, Indiana, facility.

The line is expected to be operational by April 2021 and will add capacity to produce up to 80 million vials annually under barrier isolator technology and a peristaltic pump filling mechanism.

Mike Riley, Region President, Biologics, North America said: “The industry has seen an increased demand for vial filling of biologic drugs, which has been compounded by the accelerated development of vaccine and therapeutic candidates to address the COVID-19 pandemic.”

Supply chain challenges?

Chiminski also spoke about wider supply chain issues during the Q4 call, telling analysts the CDMO has taken steps to strengthen its supply chains in response to shifting demand for APIs.

He said “we expanded our safety stock of raw materials, causing higher-than-normal inventory levels thus impacting our working capital.

“While we have not experienced any significant supply shortages to-date and have successfully navigated several challenging supply situations, the rapidly changing global demand for and supply of API and other critical manufacturing components may produce more challenges in the future.”

He added, “To further protect our critical supply needs, we continue to commit more resources to identify, navigate, and resolve potential supply chain disruptions.”