Catalent, Inc. (NYSE:CTLT) Q3 2018 Earnings Conference Call Transcript
May 01, 2018 • 08:15 am ET
Catalent Board of Directors and look forward to what will be a long-term strategic partnership. Much of the value of this transaction is in Paragon's specialized knowledge and experienced leadership team. Given this, we're also very excited to welcome Paragon's entire management team and employee base to Catalent. We expect the transactions to close during the current fiscal quarter. We intend to provide updated financial guidance when we report our results for the year just after the end of the quarter.
Turning to the next slide, we believe Paragon is a fantastic fit for Catalent. Paragon brings deep expertise in adeno-associated viral vectors, the most commonly used delivery system for gene therapy, as well as a platform for development of an expanded offering of vectors enabling entry into other adjacent technology categories to support the development and manufacturing of gene and cell therapies. This expertise combined with Paragon's manufacturing capabilities and world-class facilities will position us to capitalize on tremendous industry tailwinds in gene therapy. Paragon's leading position in vector manufacturing, its blue chip customer base and its expanding commercial footprint make it an ideal strategic fit for our business.
On Slide 6, I want to discuss how this -- transaction advances the strategic priorities that we're focused on in Catalent. For one, Paragon's strong partnerships with leading innovators in gene therapy complement or Follow the Molecule strategy, by giving us access to this rapidly growing category of biologics.
In addition, Paragon shares our Patient First Mindset in commitment to providing customers best-in-class, flexible solutions with the highest standards of quality service. Most importantly, this transaction strengthens our leadership in Biologics, building on a Cook acquisition we completed last year.
A major reason for our interest in Paragon's capabilities is the tremendous growth in demand, we're seeing for gene therapy manufacturing. These therapies have the potential to not merely treat, but cure numerous serious and complex diseases with high unmet need. There are about 680 gene and cell therapies in clinical development by about 500 biopharmaceutical companies active in this space.
By 2025, we expect approximately 30 gene therapies to be approved by the FDA. Viral vector manufacturing is challenging and very few companies have the capacity and technical expertise to produce these products at clinical and commercial scale. Given these dynamics, demand in this space is far exceeding supply.
Now I'd like to highlight Paragon's strong financial profile on Slide 8. For the past three years, Paragon has achieved impressive top line growth with 2016 through 2018 revenue CAGR of approximately 90%. And based on both revenue, we expect Paragon to contribute more than $200 million in sales for calendar year 2019. We also see additional opportunity to expand complementary manufacturing initiatives that could further contribute to top line growth over time.
Turning to the next slide, I want to highlight a few areas where this transaction will be transformative for Catalent. With the addition of Paragon, we have the opportunity to increase our long-term revenue growth from 4%