Catalent, Inc. (NYSE:CTLT) Q3 2018 Earnings Conference Call Transcript

May 01, 2018 • 08:15 am ET

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Catalent, Inc. (NYSE:CTLT) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the Catalent Investor Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder this call may be recorded.

I would now like to introduce your host for today's conference Mr. Tom Castellano, Vice President, Investor Relations and Treasurer. You may begin.

Executive
Thomas Castellano

Thank you, operator. Good morning, everyone, and thank you for joining us today to discuss Catalent's agreement to acquire Paragon Bioservices, which we announced earlier today. Joining me today is John Chiminski, Chair and Chief Executive Officer of Catalent, who will take us through our prepared remarks and Wetteny Joseph, Chief Financial Officer.

You'll find a brief slide presentation in the Investor section of our website, catalent.com, and we'll walk you through that deck this morning.

Before we begin I'd like to draw your attention to the forward-looking statements and additional legal information, which are available at the beginning of the presentation. As a reminder today's conference call contains certain projections and other forward-looking statements within the meaning of the Federal Securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements, as more fully described in Slides 1 and 2 of our presentation.

Additionally, Catalent's Form 10-K filed with the SEC on Aug 28th includes additional information on the risks and uncertainties that may bear direct on our business.

Now I'd like to turn the call over to John Chiminski.

Executive
John Chiminski

Thanks, Tom. Good morning, everyone, and thank you for joining us. We're very excited to announce this morning an agreement to acquire Paragon Bioservices, a leading viral vector development and manufacturing partner for gene therapies. We see Paragon as a strong strategic fit for Catalent and believe that this is the right time to move into the gene therapy market. Paragon will provide us new expertise and capabilities in one of the fastest growing therapeutic areas in health care, reinforcing Catalent's leadership position across biologics and positioning us for accelerated long term growth. Additionally, the expected positive impact on our revenue and EBITDA profile will deliver highly compelling value to our shareholders. I'd like to start with a brief overview of the transaction.

The total purchase price is $1.2 billion on a cash-free, debt-free basis. The transaction will be financed with proceeds from a fully committed $650 million incremental term loan as well as proceeds from an agreement to issue to investment funds associated with Leonard Green & Partners, a new series of convertible preferred stock valued in another $650 million. These proceeds will be sufficient to pay the purchase price and leave approximately $100 million to support Paragon's ongoing expansion plans. Leonard Green's investment demonstrates its belief in the value of this combination and Catalent's ability to realize the acquisitions full potential.

We're pleased to welcome Peter Zippelius, a partner at Leonard Green to the