Activist investor Elliott takes stake in drug manufacturer Catalent – source

By Maggie Fick

LONDON (Reuters) – Activist investor Elliott Investment has taken a stake in contract drugmaker Catalent, a source familiar with the matter told Reuters on Thursday.

The Wall Street Journal reported on Wednesday that Elliott had built a significant stake in Catalent, a New Jersey headquartered, NYSE listed company that does outsourced drug manufacturing work for major pharma companies including Novo Nordisk.

The Journal reported that Elliott is pushing for a change on Catalent’s board.

An Elliott spokesperson declined to comment on Thursday. Catalent declined to comment.

During the COVID-19 pandemic, Catalent was pivotal in the rapid production of vaccines as it was contracted by several companies including AstraZeneca, Johnson & Johnson and Moderna to fill vaccine vials at several of its plants in Europe and the United States.

But the company faces a range of problems. Last month, after delaying results announcements three times, it said revenue in the three-months ending March 31 had fallen 19%. It cut its annual revenue forecast for the second time.

That came after the departure of its chief financial officer in April. The company also disclosed it had delayed its cost-cutting plans and was undertaking costly corrective actions to address quality control lapses identified during multiple inspections by U.S. drug regulators at three plants.

During the results announcement in June, Catalent’s Chief Executive Alessandro Maselli said the company needed “some more time” to address some of the problems identified during the inspections.

Catalent’s shares are trading at less than half where they did a year ago, and are down about 14% this year.

“Catalent has a number of operational issues that are temporary and fixable,” shareholder Dani Saurymper, a portfolio manager at Pacific Asset Management, told Reuters in response to the news about Elliott.

He said that Catalent’s valuation is discounted compared with its contract drug manufacturing industry peers, and noted that earlier this year, there was speculation that Danaher would acquire the company.

“Catalent is a leading provider of biologics manufacturing capacity and sterile fill/finish capabilities, which are in high demand and could also hold appeal for private equity,” he added.

Elliott is known for building stakes in companies and forcing changes.

(Reporting by Maggie Fick; Editing by Mike Harrison)