CRO

Catalent hauls in $871.3M in a supersized IPO

Catalent ($CTLT) came through with the biggest life sciences IPO of what's shaping up to be a record year, pulling in $871.3 million in a blockbuster Wall Street debut.

The pharma contractor priced 42.5 million shares at $20.50 each, right in the middle of its expected range, and the company has set aside another 6.4 million for its underwriters, pegging the potential deal value at more than $1 billion by the time the offering closes. Catalent plans to spend its proceeds on reducing debts and paying off general corporate costs.

The successful offering makes Catalent just the second outsourcing outfit to go public since the biotech IPO boom began in 2013. Quintiles ($Q), the world's largest CRO, executed a $947 million debut last year, and its shares have risen about 10% ever since.

Catalent, which private equity magnate Blackstone bought from Cardinal Health for $3.3 billion in 2007, plays a role in nearly every segment of the global drug industry. In the fiscal year ended last June, the company worked with 85 of the top 100 branded drugmakers, 20 of the top 25 generics outfits and 41 of the 50 biggest producers of biologics, according to a regulatory filing. Its major clients include Johnson & Johnson ($JNJ), Roche ($RHHBY), Pfizer ($PFE) and GlaxoSmithKline ($GSK).

And while Catalent is planning to use most of its IPO haul on quotidian expenses, CEO John Chiminski said the company has its eye on some acquisitions that could expand its global reach.

"We think there's a great opportunity for further consolidation in the industry," Chiminski told TheStreet. "... We have a very aggressive M&A program, I would say. We've done 5 deals in the last three years. We've got a pretty robust funnel of M&A going forward, and we think that we'll continue to pick up companies and bring them into the Catalent family over the next few years."

As it stands, the New Jersey-headquartered Catalent gets about 66% of its revenue from its oral drug formulation business, which focuses on soft gel technologies, extended-release pills and fast-dissolving tablets. But Catalent has been working to expand its development and clinical services segment. That business leapt 51% to $404.8 million in fiscal 2013, growth the company credits to its $410 million acquisition of Aptuit's trial supply segment.

Catalent reported about $1.8 billion in revenue in fiscal 2013, a roughly 6% jump over the previous year. The company swung to a $46.8 million loss in the same period, as it spent big to expand its market share and watched cost of sales eat up about 68% of its revenue.

- read the Catalent's announcement
- watch Chiminski's interview with TheStreet