Catalent cedes some board control to activist investor Elliott after 2023 earnings disappoint

After a tumultuous year of manufacturing hiccups, executive turnover and dwindling revenues, Catalent is handing the reins to activist investor Elliott Management.

Monday, Catalent struck up a cooperation agreement with Elliott as it announced fourth-quarter revenues and unveiled a sweeping governance shakeup designed to reinvigorate the struggling contract manufacturer.

The move comes roughly one month after reports surfaced that Elliott had acquired a stake in Catalent in a bid to shuffle the manufacturer’s board.

Under Elliott’s guidance, Catalent has added four new independent directors to its board of directors. They are Steven Barg, global head of corporate engagement at Elliott; Pfizer’s former CFO Frank D’Amelio; Genzyme veteran and PTC Therapeutics board member Stephanie Okey; and Michelle Ryan, a former treasurer at Johnson & Johnson.

At the same time, John Greisch has been appointed executive chair of the board and has been put in charge of a new strategic and operational review committee. Greisch most recently served as president and CEO of medical device maker Hill-Rom Holdings from 2010 through 2018. Before his stint at Hill-Rom, Greish was president of international operations and CFO at Baxter.

The new review committee, established by Catalent’s board, will oversee the company’s business, strategy and operations, plus Catalent’s capital-allocation priorities, Catalent said in a press release.

“With global scale and market-leading development and manufacturing capabilities, Catalent is a strategic company that plays an essential role as the partner of choice for the biopharmaceutical industry,” Marc Steinberg, Elliott's senior portfolio manager, said in a statement.

The shakeup came as Catalent announced fourth-quarter revenues for its 2023 fiscal years were down 17% to $1.07 billion. For all of 2023, Catalent brought home $4.28 billion, down 9% in constant currencies from $4.8 billion in 2022.

After struggling to release its earnings report in a timely manner this year, Catalent said that it expects to file its annual report late, too.

“This fiscal year was very disappointing, largely as a result of the COVID, revenue and operational cliffs we have discussed,” Catalent CEO Alessandro Maselli said on a call with investors Monday.

To counteract the headwinds, Catalent is reducing costs at underutilized facilities, bolstering its commercial efforts in new businesses and slowing its capital deployment in affected areas, Maselli said

Back in April, Catalent cautioned that “productivity issues” and high costs at three major production sites were expected to hamper third-quarter earnings and put a damper on Catalent’s entire outlook for the fiscal year, which ran through the first half of 2023.

At the same time, Catalent revealed that its chief financial officer, Thomas Castellano, had stepped down, prompting the company to slot its president and division head for clinical development and supply, Ricky Hopson, into the finance chief’s seat.

Before Catalent's various issues, rumors had surfaced that life sciences conglomerate Danaher was looking to buy out the company at a “significant premium.” Subsequently, Danaher was said to have ditched that plan.

Still, it hasn’t all been bad news for Catalent this year.

In April, the company broke ground on a $20 million expansion of its clinical supply facility in Germany, where it’s increasing its Schorndorf site’s footprint by 32,000 square feet to add additional storage for clinical supplies that need to be kept at certain temperatures.

And a month before that, nonprofit drugmaker Harm Reduction Therapeutics tapped Catalent to help produce commercial supplies of its prospective opioid antagonist RiVive.

Editor's note: The headline to this story has been updated to clarify the situation.