Aratana hands Elanco rights to osteoarthritis med for dogs

Steven St. Peter
Aratana CEO Steven St. Peter

Aratana Therapeutics ($PETX) is trying to beef up its portfolio, and it figures a deal with Eli Lilly’s ($LLY) Elanco unit is a step in the right direction. The company is handing over rights to its osteoarthritis med for dogs to Elanco in a bid to step up business.

Elanco will have the exclusive rights to develop, manufacture and market Galliprant globally. The companies will co-promote the product in the U.S., the pair said in a statement.

Under the terms of the deal, Aratana will get an upfront payment of $45 million and additional milestone payments. Leawood, KS-based Aratana will also get co-promotion fees and royalty payments.

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The deal stands to benefit both sides. A licensing agreement for Galliprant “expands … Elanco’s robust companion animal portfolio, which will now give our customers and their patients a spectrum of treatments for managing osteoarthritic pain,” Jeff Simmons, Elanco’s president of Animal Health, said in a statement.

For Aratana, a little dealmaking could go a long way toward expanding Galliprant’s global footprint. The company “understands the value of relationships with the right collaborators," CEO Steven St. Peter said in a statement. "We believe that this collaboration with Elanco, a leading animal health company, is a watershed event for the emerging pet biotech sector and further validates our focus on the pet therapeutics opportunity."

Aratana was not singing the same tune a year ago. In March 2015, the company ended its licensing agreement with Elanco for AT-004, its drug to treat B-cell lymphoma in dogs. The deal was originally formed with Novartis ($NVS) Animal Health, which Lilly bought in 2014.

Aratana paid $2.5 million and another $500,000 to get the marketing rights to AT-004 back, a “great price,” St. Peter said at the time. The move made sense from a business perspective, St. Peter said, because Aratana already has the rights to a similar drug, AT-005, which is used to treat T-cell lymphoma in dogs. Both lymphoma treatments have fallen a bit short, so there's a lot riding on Galliprant. 

Shares in Aratana were up 2% the day after the company announced its deal with Elanco.

- read the statement

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