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Catalent Inc.’s stock tumbled 25% Friday, putting it on track for its second biggest one-day percentage decline, after the drug manufacturer issued a profit warning for its fiscal third quarter and said its finance head has left, rattling investor confidence.
The stock led S&P 500 index decliners in heavy volume, with nine million shares changing hands in the first hour and a half of trade, compared with a daily average of 2.25 million over the last 65 days.
Somerset, N.J.-based Catalent said productivity issues and higher-than-expected costs at three of its facilities — including two of its largest plants — would materially and adversely impact results for the quarter through March 31 and its guidance for the rest of the fiscal year.
Catalent
CTLT,
which provides delivery technology for drugs, biologics and consumer health products, counts Moderna Inc.
MRNA,
Johnson & Johnson
JNJ,
and Sarepta Therapeutics Inc.
SRPT,
among its manufacturing partners. It makes vaccines for Moderna and J&J and is working with Sarepta to make its new Duchenne muscular dystrophy therapy.
See now: Sarepta stock hit by renewed uncertainty about gene therapy treatment for rare disease
The company said its gene therapy plant in Harmans, Maryland near the BWI airport experienced a slower ramp of production than expected as it moved to address issues raised by regulators.
That combined with operational challenges related to a new enterprise resource planning system will impact revenue that was expected to come in the fourth quarter.
“Timely resolution of these issues was delayed by the necessity of focusing site resources on important regulatory inspections involving the BWI site, which were successfully completed,” the company said in a statement.
But the expected revenue can’t be recouped immediately given manufacturing constraints, so Catalent is expecting the shortfall to be recovered in the second half of calendar year 2023, which is the first half of its 2024 fiscal year.
See: Catalent stock rockets 21% premarket on report of takeover interest from Danaher
And that’s not all. Catalent also saw higher-than-expected costs at a drug product and drug substance facility in Bloomington, Indiana, and another in Brussels, Belgium.
That was after regulators who inspected the facilities directed the company to make improvements to its operational and engineering controls.
“While these issues are also expected to affect the company’s fiscal fourth quarter to end on June 30, 2023, productivity levels in Bloomington are expected to be restored to previously forecast levels in that quarter,” said the statement.
As with BWI, Catalent is not expecting to recoup lost revenue until after the close of the current fiscal year.
Read now: Moderna is developing a vaccine against the tick-borne Lyme disease, in a first for the company
The company also named Ricky Hobson, current president and division head for clinical development and supply, as interim chief financial officer, replacing Thomas Catellano, who departed on Thursday.
Catalent is expecting to report its fiscal third-quarter numbers on May 9. Analysts polled by FactSet are expecting per-share earnings of 64 cents, down from $1.04 a year ago. Sales are expected to fall to $1.128 billion from $1.273 billion.
The stock is down 35% in the last 12 months, while the S&P 500
SPX,
has fallen 6%.
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