Luke Sergott: Great, thanks. Just kind of want to dig in here on the overall gene therapy franchise and how big this is for you. I know that you have — you guys have always bucketed it as your mAbs and the other drivers of indications and it would be kind of be helpful as you think about the rest of the gene therapy business outside of the Sarepta 9001 ELEVIDYS drug.
Alessandro Maselli: Hi, Luke, thanks. This is Alessandro. Luke, first of all, let me clarify our mAbs protein business is not classified under the gene therapy, we call it the drug substance and thanks for the question, because we are having a very good year in drug substance and I do believe there is good momentum going-forward there. We had a lot of seeding happening in that business over the last several years and now it seems that the harvest time is coming with a significant amount of late-stage program heading toward commercialization, some of them very exciting, have been acquired by big pharma. So they’ve extended patient population. So very exciting areas for us, drug substance and I will be — believe will be a great contributor as we go forward.
In terms of the gene therapy business, as I said, that we have a pretty balanced portfolio. Number one, with Sarepta as well, we have several programs with them, some of them very exciting. But also, there is — I’ve seen some good momentum there. Some programs getting some early, very good clinical data which made the customers more bullish in moving full steam ahead in scaling up. So Luke, the private funding environment, it is what it is. We were the first one to call it out one year ago, still remains a little bit uncertain. But when you look at our own portfolio and our own pipeline, I feel pretty good about it. The cell therapy story remains a little bit one where we have reviewed our outlook there. We have reassessed our outlook. And so as Matti said, we take an opportunity to want to really rebalance the absorption there.
And this will be a driver of margin improvement going forward because now we’re going to suffer by much less underutilization and negative EBITDA impact there. So hopefully, this gives you a little bit of color across all the different subsegments.
Luke Sergott: Yes, that helps. And then I guess on the Biologics, there’s elevated pass-through coming through here. You have the GLP-1, you have the pens also with the Sarepta, you guys kind of called that out. Can you update like how much of the business comes from the sourcing? And then are you seeing a similar margin that you have in the past there or is this going to be elevated like we saw with the COVID sourcing?
Matti Masanovich: When you think of the Biologics business and the pass-through revenue, Sarepta has about a 50% pass-through content, and that’s materials and testing. The balance of the business is between, I would say, 15% to 20% is where it sits from a pass-through perspective. And the margins are a little bit different. Margins are pretty low, as we articulated on the — as Alessandro articulated on the Sarepta piece. And they’re probably, I would say, mid-single digits to mid-teen digits on the margins on the balance of the business, of that 15% to 20%.
Alessandro Maselli: And I just would add one other element of color there, drug product is very different from drug substance in general when it comes to material pass-through. Not necessarily the materials are less expensive, but most of the times, they are bought by the customers, not by us. So they don’t affect revenues, they don’t affect our margin.
Luke Sergott: Great, thanks.
Operator: Our next question today comes from Dave Windley of Jefferies. Your line is open.
Dave Windley: Hi, thanks for taking my question. I hope you can hear me, I’m in a hotel basement. Can you hear me?
Matti Masanovich: You sound good.
Alessandro Maselli: You sound good, Dave.
Dave Windley: Okay, all right, thank you. So my question is maybe a follow-on to Tejas’ earlier question, but a broader one. The company, let’s call it pre-pandemic, used to talk about the diversity of the platform, 7,000 products, no one product really makes up a substantial percentage of revenue, doesn’t move the needle necessarily. And you’re moving into a period where now two products very substantially move the needle. I guess what I’m also thinking is that, again, related to Tejas’ question, Sarepta has a label expansion kind of optionality element to it and the GLP-1s have oral delivery of GLP-1 data readouts coming out. So how do you think about the concentration of those revenue streams in your business and risk-mitigating that in the potential that both of them could see headwinds from developments in the pipeline? Thank you.
Alessandro Maselli: Yeah, sure. So Dave, a couple of things. First of all, you’re calling out two of the key, I would say, dynamic of our industry overall, surely GLP-1 being one. And I feel very proud and look excited that Catalent was able to have such an exposure to that. So I don’t see that necessarily under negative terms. It’s great and it’s something that can be applied across several therapeutic dynamics — therapeutic areas, has dynamics across different geographies. So I would say it’s a little bit of a different element compared to the gene therapy program that you have mentioned. With regards of — so — and so it’s such that you’re also going forward, because of the different therapeutic areas, the different potential indication, extension of indications of GLP-1s, I don’t see that category to be a significant element of volatility, so to speak.
