Aratana Therapeutics ($PETX) has broken free of the red tape that has been hampering the launch of AT-004, its drug to treat B-cell lymphoma in dogs, which was fully approved by the USDA in early January. The company announced late Tuesday that it has terminated a licensing agreement with Eli Lilly's ($LLY) Elanco--a deal that had originally been formed with Novartis ($NVS) Animal Health, which Lilly bought last year.
|Steven St. Peter|
Aratana has regained the marketing rights to AT-004 in the U.S. and Canada for an upfront fee to Elanco of $2.5 million and an additional $500,000 upon the first commercial sale of the drug. Aratana will also handle the manufacturing of the drug, which otherwise might have taken Elanco a year to get started on, said Aratana CEO Steven St. Peter in a conference call with analysts.
During that call, St. Peter said getting the product back just made good business sense, especially because Aratana has full rights to a similar drug, AT-005, which is conditionally approved by the USDA to treat T-cell lymphoma in dogs. "AT-004 for canine B-cell lymphoma is a logical product to market in tandem," he said. "In fact, the clinical presentation of a dog diagnosed with lymphoma is similar for B-cell and T-cell disease. The [type] is only clear after the dog has had a laboratory test performed, and the result of that test will guide the choice of target therapy. By having both therapies available, one can address four times as many cases with a product. Hence AT-004 and AT-005 belong together."
Analysts were curious if there were any loopholes in the Elanco deal, with one even pressing St. Peter for details about how Aratana got such a "great price" on AT-004. St. Peter said he had actually been trying to get the product back before Lilly bought Novartis, because he wanted to speed up its market introduction. The USDA granted AT-004 a conditional approval in 2012, which would have allowed Aratana to start selling the drug to veterinary clinics while it completed the pivotal trials for a full approval.
The only concession Aratana made in regaining AT-004 was to agree that if it were to outlicense or otherwise transfer the drug to another company, Elanco would have the first rights of negotiation. Elanco and Aratana also agreed "to periodically review collaboration opportunities in oncology," according to the press release announcing the deal.
Aratana still has some snafus to work out in the manufacturing of AT-004 before it can make the product widely available, St. Peter said. Last month, Elanco put a hold on production, citing a quality issue. St. Peter told analysts that a nonpathogenic contaminant had been found in 8 vials of the drug that were made before Aratana acquired the company that originally developed AT-004. Aratana is still analyzing the issue, but St. Peter said the other lots of the product are clean.
St. Peter said Aratana is in the process of transferring the manufacturing of AT-004 to its San Diego facility, which will need to be expanded to accommodate the production. Meanwhile, the company is making a limited quantity of the drug available on a compassionate-use basis to owners of dogs that participated in the AT-004 trials. Aratana hopes to make the product fully available in the fourth quarter of 2015, he said.
- here's the press release