Contract drugmaker Catalent (CTLT) - Get Catalent Inc Report  announced Monday that it has agreed to buy closely held Paragon Bioservices for $1.2 billion in cash, the latest deal in the burgeoning gene-therapy drug area.

The Wall Street Journal had reported earlier Monday that Catalent would announce the all-cash deal for Paragon, paving the way for its entry into the burgeoning gene-therapy drug market.

Catalent, which develops and manufactures drugs for pharmaceutical companies, had about $2.5 billion in sales last year. CEO John Chiminski has been trying to build up the company's capabilities in markets with high growth potential, like gene therapies, where it hasn't had a presence, the Journal said.

Paragon provides similar supplies for gene-therapy drugmakers, manufacturing so-called viral vectors that are used to deliver the gene replacements to their targets. The company last week unveiled a 200,000-square-foot manufacturing facility in suburban Maryland, the Journal said.

TheStreet Recommends

Paragon is backed by private-equity firms Camden Partners and NewSpring Capital.

Gene therapies aim to replace defective genes with healthy ones. The first was approved in the U.S. in 2017, and dozens more are in development. Researchers have said they will become an important option for treating inherited diseases.

Shares of Catalent jumped more than 7% in early trading on the Nasdaq Stock Exchange, rising $2.91 to $42.16.