Aratana misses Q4 forecast, says product launches 'on track'

Investors are clearly impatient with Aratana Therapeutics ($PETX), judging from the tenor of the questions during the company's conference call the morning after its fourth-quarter earnings announcement on March 14. Aratana did beat estimates--reporting a net loss in the period of $12.9 million, or 37 cents per share, versus the 39 cents that analysts surveyed by Zacks Investment Research had anticipated--but its sales of $63,000 fell far short of the $232,000 that had been predicted. And even though the company is expecting a big FDA approval next week, with two more to follow this year, it has told investors not to expect its first major product launch until this fall.

The launch of that product, Galliprant (grapiprant) to treat pain in dogs with osteoarthritis, has been a major "source of excitement in recent months" at Aratana, said CEO Steven St. Peter during the earnings call. Ongoing efforts to prepare for commercialization "are very much on track," he added.

But Aratana won't be ready to launch Galliprant immediately because the company needs to finalize product labeling, line up distributors and ramp up its supply of the drug, St. Peter said during the call. Furthermore, the FDA is also expected to rule soon on Aratana's Entyce (capromorelin), for stimulating appetite in dogs, and Nocita (bupivacaine), a long-acting pain reliever for dogs, and the company wants to make sure it is sequencing the launches of all three drugs properly, St. Peter said.

The analysts on the call were also eager for details about Aratana's international expansion plans. During its investor day in New York in November, St. Peter said the company was looking for partners to help it commercialize its products in Europe. And in February, it filed for approval of Galliprant with the European Medicines Agency. During the earnings call, St. Peter said Aratana has had interest from potential partners but that he felt the success of the U.S. launch would be critical to advancing those discussions.

For the full year, Aratana nearly doubled its net loss to $84.1 million ($2.45 per share) on sales of $678,000, most of which came from Tactress (AT-005), its drug to treat canine T-cell lymphoma. The company initially had high hopes for Tactress and another drug to treat B-cell lymphoma in dogs, but St. Peter warned investors last fall that neither product was performing as well as he had hoped and that the bigger market opportunities would likely come with Galliprant and the other newer drugs.

For now, all eyes are on Galliprant, a drug that works by blocking the pain receptor EP4. Aratana plans to play up the drug's advantages against the competition, which includes Zoetis' ($ZTS) COX-2 inhibitor, Rimadyl. In a pivotal trial with 280 dogs, Galliprant performed well in relieving pain over placebo, and Aratana is confident the drug is less likely to touch off side effects that other pain relievers can cause, such as stomach upset and bleeding.

Still, Wall Street is taking a wait-and-see stance on Aratana. The company's shares fell more than 9% in morning trading on March 15 to $4.17. And the company is still trading far below its one-year high of $20.

- here's the earnings release
- read more at the Kansas City Business Journal

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