Just two months after Zoetis ($ZTS) announced it was drastically shrinking its product portfolio, one of its partners has decided to break free from the embattled animal health giant as it embarks on a major restructuring. Oasmia Pharmaceutical, a Swedish company that develops cancer drugs for both pets and people, announced Tuesday that it has established a sales presence in the U.S. for Paccal Vet-CA1, a cancer drug that was conditionally approved by the FDA in 2014 and was formerly distributed by Zoetis. Oasmia has also filed an F-1 to the SEC to offer $23 million worth of shares on the Nasdaq exchange.
Paccal Vet-CA1 is a specially formulated version of paclitaxel, a commonly used chemo drug in people that can't be given to pets because of harsh side effects. The conditional approval allows Oasmia to market the product on a limited basis while conducting further research to support a full approval. The drug has shown some promise in treating some mammary tumors and squamous cell carcinomas in dogs, according to a press release announcing the launch of Oasmia's U.S. sales office.
"I am very pleased that Oasmia's expansion will facilitate the opportunity for veterinarians to use paclitaxel in companion animals, a substance earlier impossible to administer due to intolerable side effects," said Oasmia Chief Medical Officer Henrik Rönnberg in the release. "I look forward to working alongside veterinary oncologists as we continue to develop treatment options for pets with cancer, providing the best treatment possible and improving quality of life."
In addition to reclaiming the distribution rights to Paccal Vet, Oasmia took back Doxophos Vet, a formulation of the chemo drug doxorubicin, which had been licensed to Abbott Laboratories ($ABT). Zoetis acquired Abbott's veterinary portfolio for $255 million in late 2014. Doxophos Vet is in the final stages of development for treating lymphoma in dogs, according to Oasmia.
Oasmia's quest to break free of Zoetis isn't entirely surprising, considering the turmoil that has rocked the world's largest animal health company in recent months. Under pressure from activist hedge fund investor William Ackman of Pershing Square Capital, Zoetis said in May that it would eliminate 5,000 SKUs and exit 10 manufacturing plants in an effort to cut costs and boost its operating margin from 25% in 2014 to 34% by 2017. The company plans to cut about 2,500 jobs--one quarter of its workforce.
Meanwhile, rumors have been swirling around that Zoetis will eventually be acquired. In late June, the company's shares soared on a Wall Street Journal report suggesting that Valeant ($VRX)--another Ackman holding--would acquire Zoetis. That offer has not materialized. Other companies have been named as potential suitors, including Bayer. But now some analysts are speculating that Zoetis itself could be on the lookout for additions and might even be interested in acquiring veterinary distributor IDEXX ($IDXX).
As for Oasmia, it could face a rough reception on Wall Street. Recent IPOs in the animal health sector have underperformed. Nexvet Biopharma ($NVET), for example, went public in February at $10 a share and is now trading at $4.98. Jaguar Animal Health ($JAGX), which staged its downsized and delayed IPO at $7 in May, is now trading at $4.84.
Oasmia expects the transition of rights from Zoetis to be completed by September. The company, which is traded on Nasdaq Stockholm and the Frankfurt Stock Exchange, expects its U.S. IPO to close by the end of July and has filed to trade under the symbol OASM.
- here's Oasmia's U.S. launch press release
- here's more on the company's proposed offering
- read the F-1 filing here