Catalent inks deal to offload blow-fill-seal business to SK Capital

New Jersey CDMO Catalent made waves last year as it inked one COVID-19 vaccine manufacturing deal after another, all the while continuing its push into cell and gene therapy. Now, the manufacturer is divesting one of its major business units as it looks to hone that focus on cutting-edge technology.

Private equity firm SK Capital is ponying up an undisclosed sum to purchase Catalent’s blow-fill-seal sterile CDMO business. With a definitive agreement locked down, the parties expect the deal to close in April. Once all is said and done, the business will operate as a new, independent company, SK said.

Catalent’s blow-fill-seal (BFS) business currently operates out of a single site in Woodstock, Illinois, where the manufacturer cranks out prefilled drugs for clinical and commercial supply. The site boasts more than 30 BFS filling suites and dedicated scale-up machinery, according to Catalent’s website.

"The Woodstock site is a market leader in BFS sterile manufacturing with a rich heritage and long-dated track record as a critical supplier to several global pharmaceutical companies, and a portfolio of leading indications within the ophthalmic and respiratory therapeutic areas," Aaron Davenport, managing director at SK Capital Partners, said via email. 

What's more, BFS manufacturing has the potential to support the COVID-19 response on multiple fronts, from vaccines and diagnostics to certain products used in clinical trials, Davenport said. "The Woodstock site is already working on several related opportunities that we intend to continue supporting under our ownership," he said.

Meanwhile, Catalent sees the divestment as a chance to double down on other technologies. 

“Divesting our BFS manufacturing business will allow us to concentrate on our growing core activities of developing oral, inhaled and biologic drugs with customers, as well as rapidly extending our technological portfolio of new, emerging modalities, including cell and gene therapies,” Jonathan Arnold, president, oral and specialty delivery at Catalent, said in a release.

Catalent's shares were up about 2% this morning. 

RELATED: Horizon's Tepezza supply dwindles as manufacturer Catalent pivots to Warp Speed vaccines

While the new business will largely operate independently of Catalent, certain continuity measures are being put in place, a Catalent spokesperson said by email. The Woodstock site will continue to rely on Catalent's Research Triangle Park facility in Morrisville, North Carolina, for analytical testing, and the two companies have reached a long-term agreement to cover that work, he said.

SK also plans to retain the employees and leadership team in Woodstock once the deal closes, though it may also invest in additional talent, SK's Davenport said.

Despite a plethora of COVID-19 vaccine manufacturing projects, Catalent still made time to stump up some major investments in cell and gene therapy last year. The company established a manufacturing foothold in Belgium as part of a $315 million deal early in 2020 before shelling out another $14 million in October to snag an adjacent site from Bone Therapeutics’ Skeletal Cell Therapy Support SA unit.

The CDMO is building out a 60,000-square-foot commercial production and fill-finish facility next to the Bone site, which will create a cell therapy “center of excellence" in Gosselies, Belgium, by the end of 2021.

In September, Catalent sketched out plans to infuse $130 million into its cell and gene therapy manufacturing facility in Harmans, Maryland, to boost late-stage production capacity. While the expansion is largely a play to break into the future cell and gene therapy market, it could also benefit Catalent’s pandemic work.

RELATED: AstraZeneca taps Catalent for COVID-19 vaccine finishing, packaging at Italian plant

AstraZeneca in August tapped Catalent to produce bulk drug substance, including viral vectors, for its vaccine at the CDMO’s Harmans gene therapy facility. Catalent set the goal to kick off production there in 2020’s third quarter, building on its previous pact with AstraZeneca for finishing and packaging duties at its Anagni, Italy, site.

Meanwhile, Catalent has also signed on to help Johnson & Johnson with drug substance development and manufacturing, plus drug product fill-finish services on its COVID-19 vaccine. In June, the CDMO tied up with Moderna, too, agreeing to handle fill-finish duties for up to 100 million doses of Moderna’s mRNA shot.