|Aratana CEO Dr. Steven St. Peter|
Pet meds developer Aratana Therapeutics ($PETX) is still bleeding cash as it labors to move 18 product candidates through its pipeline: It announced after the market closed Monday that its loss in the third quarter doubled year over year to $10.1 million. The 35-cents-per-share loss was better than the 43-cent loss analysts were expecting, but Aratana's stock still dropped 2.5% during Tuesday trading to $11.50.
Aratana's third-quarter sales came in at $43,000, falling far short of the $195,000 analysts were expecting, according to Zacks estimates compiled by the Associated Press. Revenues came mostly from license and collaboration fees related to AT-004, the canine lymphoma drug being marketed in the U.S. and Canada by Novartis ($NVS) Animal Health. AT-004 is based on Rituxan, the blockbuster Roche ($RHHBY) drug used to treat B-cell lymphoma.
Aratana has been struggling to live up to Wall Street's high expectations, which were set when it raised $40 million in its July 2013 IPO and then $90 million in a secondary offering 6 months later. As the company's losses have continued to widen, its share price has fallen far from its 12-month high of $25.50.
Dr. Steven St. Peter, Aratana's CEO, told investors in an earnings call Tuesday morning that despite the company's challenges--and an overall softening of enthusiasm for animal health on the Street--he remains optimistic.
"We continue to be extremely excited about the animal health industry and specifically the pet therapeutics industry, which is where we really see the growth opportunity," St. Peter said. But he also added a bit of a warning, saying, "the idea of treating pet medical conditions with kind of the best of human medicine, including biotech and pharma, … is a new proposition."
The company is betting big that pet owners will eventually buy into the idea of treating their cats and dogs with cutting-edge medicines. When St. Peter spoke with FierceAnimalHealth last month, he said he was particularly optimistic about AT-005, Aratana's treatment for T-cell lymphoma, which has a conditional approval from the USDA. The company has maintained full commercialization rights to the drug, and it started taking orders from veterinary clinics in late October.
"During the introduction, we're giving veterinarians a 30% discount if they share data back with us about how they're using it and what the experience is like," St. Peter said. "Then we've committed to publish the data and share it so all veterinarians can understand how it's being used. We're very pleased with the launch." During Tuesday's earnings call, St. Peter added that he expected AT-005 to roll out to 75 veterinary clinics by the end of 2015.
Over the past year, Aratana has bulked up its pipeline by forming development partnerships for products across a range of diseases, including osteosarcoma and osteoarthritis in dogs, and atopic dermatitis, which affects both dogs and cats. But the company's aggressive development program comes at a steep price: R&D expenses totaled $13.9 million in the first 9 months of the year, up from $7.8 million in the same period a year ago.