LEAWOOD, Kan., May 8, 2019 /PRNewswire/ -- Aratana
Therapeutics, Inc. (NASDAQ: PETX), a pet therapeutics company
focused on the development and commercialization of innovative
therapeutics for dogs and cats, announced its first quarter 2019
financial results and recent business highlights.
"I am very pleased that we recorded revenue growth from all
three of our marketed therapeutics in the first quarter, which has
resulted in our strongest quarter of product sales in the history
of the company," stated Craig
Tooman, President and Chief Executive Officer of Aratana
Therapeutics. "Moving forward, we plan to focus on driving revenues
and successfully advancing our pipeline of best-in-class
therapeutic candidates."
Proposed Merger with Elanco Animal Health
On
April 26, 2019, Aratana signed an
agreement to be acquired by Elanco Animal Health in a
stock-for-stock transaction. Subject to the terms of the agreement,
upon the closing of the transaction, Aratana stockholders will
receive 0.1481 share of Elanco common stock and one contingent
value right (CVR) for each share of Aratana common stock. The CVR
of $0.25 in cash per Aratana share
shall be granted to Aratana stockholders as of the closing date and
paid if capromorelin achieves certain sales levels on or before the
end of 2021. Including the CVR, the proposed transaction represents
aggregate value of up to approximately $245
million, based on the proposed exchange ratio and the
closing prices of Aratana common stock and Elanco common stock on
April 24, 2019. The proposed
transaction was unanimously approved by the Aratana Board of
Directors and remains subject to customary closing conditions,
including approval by Aratana stockholders and clearance under the
Hart-Scott-Rodino Antitrust Improvements Act.
Financial Results
Aratana recorded $7.4 million in total revenues for the first
quarter of 2019 compared to $4.0
million in total revenues in the first quarter of 2018.
Total revenues in the first quarter of 2019 included $2.5 million in NOCITA net product sales,
$1.5 million in ENTYCE net product
sales and $3.4 million in licensing
and collaboration revenue from Elanco for GALLIPRANT. The first
quarter of 2019 net loss was $6.8
million or $0.14 diluted loss
per share compared to a net loss of $8.5
million or $0.19 diluted loss
per share for the corresponding quarter ended March 31, 2018.
The cost of product sales totaled $1.5
million in the first quarter of 2019 compared to
$0.5 million in the corresponding
period in 2018. The cost of product sales in the first quarter of
2018 were lower due to sales of inventories that were previously
written down. Aratana anticipates margins will improve in 2019
compared to full year 2018, as inventories have normalized based on
product performance.
During the three months ended March 31,
2019, royalty expense was $1.7
million, which was an increase of $0.9 million as compared to the corresponding
2018 period. The increase was primarily a result of an increase in
net sales of GALLIPRANT by Elanco and increased net product sales
of NOCITA and ENTYCE.
Research and development expenses totaled $1.8 million in the first quarter ended
March 31, 2019 compared to
$2.2 million for the quarter ended
March 31, 2018. The first quarter of
2018 included a one-time $0.5 million
option fee to AskAt Inc. Aratana anticipates research and
development expenses to increase slightly in the remainder of 2019
as pipeline programs continue to progress.
Selling, general and administrative expenses totaled
$9.2 million for the first quarter of
2019 compared to $7.7 million for the
same period in 2018. The increase was primarily due to
stock-based compensation and severance expenses related to the
resignation of the former Chief Executive Officer of the Company in
January 2019. The Company anticipates
selling, general and administrative expenses to increase for the
remainder of 2019 as compared to the corresponding 2018 period due
to expenses related to the proposed merger and related matters.
Selling, general and administrative expenses related to current
operations are expected to be relatively consistent for the
remainder of 2019 as compared to the corresponding 2018 period.
As of March 31, 2019, Aratana had
approximately $37.4 million in cash,
cash equivalents, restricted cash and short-term investments.
Business Highlights
- NOCITA® (bupivacaine liposome injectable
suspension): NOCITA net product sales continued to increase
sequentially quarter-over-quarter as a result of the growing
account base and increasing size of average monthly orders.
Additionally, the Company has commenced the regulatory process for
a smaller 10 mL vial size, which if approved, may allow Aratana to
expand the account base from mainly specialty clinics to general
practice clinics.
- ENTYCE® (capromorelin oral solution): In the
first quarter of 2019, ENTYCE net product sales increased by more
than 15 percent compared to the fourth quarter of 2018. ENTYCE was
ordered by more than 9,000 accounts in the first quarter of 2019,
which is an approximately 60 percent increase over the same period
of 2018, and on average, accounts ordered approximately 2.3 times
within the quarter.
- Capromorelin for Cats: In February 2019, the Company received a technical
section complete letter for safety from FDA's Center for Veterinary
Medicine (CVM) for capromorelin (AT-002) in cats. The Company's
pivotal field effectiveness study evaluating the therapeutic
candidate for weight management in cats with chronic kidney disease
is anticipated to complete target enrollment mid-2019.
- GALLIPRANT® (grapiprant tablets): Elanco
continues to report strong sales of GALLIPRANT in the United States and launched GALLIPRANT in
Europe in the first quarter of
2019.
- AT-019: In early-2019, Aratana started transferring the
manufacturing process of the active pharmaceutical ingredient and
early formulation work for AT-019, a potent and innovative EP4
receptor antagonist therapeutic candidate for pain, inflammation
and other indications.
Webcast & Conference Call Details
Given the
pending transaction with Elanco, management will not be hosting a
conference call to discuss the Company's financial results for the
first quarter of 2019. For investor inquiries, contact Aratana
directly.
About Aratana Therapeutics
Aratana Therapeutics is a
pet therapeutics company focused on developing and commercializing
innovative therapeutics for dogs and cats. Our mission is to
successfully develop and deliver best-in-class therapeutics,
provide comprehensive service to veterinarians and serve as a
collaborator of choice for human and animal health companies. We
believe our therapeutics are highly differentiated, resolve
recognizable needs in compelling markets and have therapeutic
profiles superior to the standard of care. For more information,
please visit www.aratana.com.
Contacts
For investor inquires:
Rhonda Hellums
ir@aratana.com
(913) 353-1026
For media inquiries:
Rachel
Reiff
media@aratana.com
(913) 353-1050
IMPORTANT SAFETY INFORMATION
ENTYCE®
(capromorelin oral solution) is for use in dogs only. Do not use in
breeding, pregnant or lactating dogs. Use with caution in dogs with
hepatic dysfunction or renal insufficiency. Adverse reactions
in dogs may include diarrhea, vomiting, polydipsia, and
hypersalivation. Should not be used in dogs that have a
hypersensitivity to capromorelin. Please see the
full Prescribing Information for more detail.
NOCITA® (bupivacaine liposome injectable suspension)
is for use in dogs and cats only. Do not use in dogs or cats
younger than 5 months of age, dogs that are pregnant, lactating or
intended for breeding. Do not administer by intravenous or
intra‐arterial injection. Adverse reactions in dogs may include
discharge from incision, incisional inflammation and vomiting.
Adverse reactions in cats may include elevated body temperature,
infection or chewing/licking at the surgical site. Avoid concurrent
use with bupivacaine HCl, lidocaine or other amide local
anesthetics. Please see the full Prescribing
Information for more detail.
GALLIPRANT® (grapiprant tablets) is not for use in
humans. For use in dogs only. Keep this and all medications out of
reach of children and pets. Store out of reach of dogs and other
pets in a secured location in order to prevent accidental ingestion
or overdose. Do not use in dogs that have a hypersensitivity to
grapiprant. If Galliprant is used long term, appropriate monitoring
is recommended. Concomitant use of Galliprant with other
anti-inflammatory drugs, such as COX-inhibiting NSAIDs or
corticosteroids, should be avoided. Concurrent use with other
anti-inflammatory drugs or protein-bound drugs has not been
studied. The safe use of Galliprant has not been evaluated in dogs
younger than 9 months of age and less than 8 lbs (3.6 kg), dogs
used for breeding, pregnant or lactating dogs, or dogs with cardiac
disease. The most common adverse reactions were vomiting, diarrhea,
decreased appetite, and lethargy. Click here for full prescribing
information.
Forward-Looking Statements Disclaimer
This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to
matters of historical fact should be considered forward-looking
statements, including without limitation statements with respect to
anticipated financial performance; the proposed merger of Aratana
with Elanco; the expected timetable for completing the merger; our
anticipated use of cash in the remainder of 2019; our ability to
bring innovative therapeutics to the market; steps necessary for
and timing of regulatory submissions and approvals of therapeutic
candidates; study, development and commercialization of
therapeutics or therapeutic candidates; timing of anticipated study
results; increased market recognition of and demand for our
therapeutics; efforts to build the inappetence market; potential
use and timing of availability of the 10 mL vial size of NOCITA;
expectations regarding trends in selling, general and
administrative expenses; and statements regarding the Company's
efforts, plans and opportunities, including, without limitation,
expanding account bases, advancing our therapeutic candidates and
offering safe and effective therapeutics that elevate the standard
of care in veterinary medicine.
These forward-looking statements are based on management's
current expectations. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, the
following: our history of operating losses and our expectation that
we will continue to incur losses for the foreseeable future;
failure to obtain sufficient capital to fund our operations; risks
relating to the impairment of intangible assets; risks pertaining
to legal proceedings, including stockholder class action lawsuits;
unstable market and economic conditions; restrictions on our
financial flexibility due to the terms of future financing
arrangements, including credit facilities; our substantial
dependence upon the commercial success of our therapeutics;
development of our biologic therapeutic candidates is dependent
upon relatively novel technologies and uncertain regulatory
pathways, and biologics may not be commercially viable; denial or
delay of regulatory approval for our existing or future therapeutic
candidates; failure of our therapeutic candidates that receive
regulatory approval to achieve market acceptance or achieve
commercial success; product liability lawsuits that could cause us
to incur substantial liabilities and limit commercialization of
current and future therapeutics; failure to realize anticipated
benefits of our acquisitions and difficulties associated with
integrating the acquired businesses; development of pet
therapeutics is a lengthy and expensive process with an uncertain
outcome; competition in the pet therapeutics market, including from
generic alternatives to our therapeutic candidates, and failure to
compete effectively; failure to identify, license or acquire,
develop and commercialize additional therapeutic candidates;
failure to attract and retain senior management and key scientific
personnel; our reliance on third-party manufacturers, suppliers and
collaboration partners, including with respect to adequate quality
control and compliance with regulatory requirements, difficulties
with complex and unique manufacturing processes, their ability to
obtain raw materials and the conduct of our target animal studies;
regulatory restrictions on the marketing of our approved
therapeutics and therapeutic candidates; our small commercial sales
organization, and any failure to create a sales force or
collaborate with third-parties to commercialize our approved
therapeutics and therapeutic candidates; difficulties in managing
the growth of our company; significant costs of being a public
company; risks related to the effectiveness of our internal
controls; changes in distribution channels for pet therapeutics;
consolidation of our veterinarian customers; limitations on our
ability to use our net operating loss carryforwards; the impact of
tax reform legislation; impacts of generic products; safety,
quality or efficacy concerns with respect to our therapeutic
candidates; effects of system failures or security breaches; delay
or termination of the development of grapiprant therapeutic
candidates and commercialization of grapiprant products that may
arise from termination of or failure to perform under the
collaboration agreement and/or the co-promotion agreement with
Elanco; risks relating to customer exposure to rising costs and
reduced customer income; risks relating to a highly competitive
health industry; failure to obtain ownership of issued patents
covering our therapeutic candidates or failure to prosecute or
enforce licensed patents; failure to comply with our obligations
under our license agreements; effects of patent or other
intellectual property lawsuits; failure to protect our or our
licensors' intellectual property; changing patent laws and
regulations; non-compliance with any legal or regulatory
requirements; litigation resulting from the misuse of our
confidential information; the uncertainty of the regulatory
approval process and the costs associated with government
regulation of our therapeutic candidates; failure to obtain
regulatory approvals in foreign jurisdictions; effects of
legislative or regulatory reform with respect to pet therapeutics;
the volatility of the price of our common stock; the additional
compliance requirements now that we are no longer an emerging
growth company; dilution of our common stock as a result of future
financings; the influence of certain significant stockholders over
our business; and provisions in our charter documents and under
Delaware law could delay or
prevent a change in control. These and other important factors
discussed under the caption "Risk Factors" in the proxy
statement/prospectus to be mailed to Aratana's stockholders and in
Elanco's and Aratana's respective filings with the U.S. Securities
and Exchange Commission, or the SEC, that are available on the
SEC's web site located at www.sec.gov, including in Elanco's and
Aratana's Annual Reports on Form 10-K for the fiscal year ended
December 31, 2018, along with
Aratana's and Elanco's other reports filed with the SEC, including
our Quarterly Reports on Form 10-Q, could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release. Any such forward-looking
statements represent estimates or statements as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change,
except as required under applicable law. These forward-looking
statements should not be relied upon as representing our views as
of any date subsequent to the date of this press release.
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with the
proposed transaction between Aratana Therapeutics, Inc., a
Delaware corporation ("Aratana")
and Elanco Animal Health Incorporated, an Indiana corporation ("Elanco"), pursuant to
the terms of that certain Agreement and Plan of Merger, dated as of
April 26, 2019, by and among Aratana,
Elanco and Elanco Athens, Inc., Elanco will file with the SEC a
registration statement on Form S-4 that will include a proxy
statement of Aratana that also constitutes a prospectus of Elanco
(the "proxy statement/prospectus"). The definitive proxy
statement/prospectus will be delivered to stockholders of Aratana.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE
PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the registration statement and the definitive proxy
statement/prospectus (when available) and other documents filed
with the SEC by Elanco and Aratana through the website maintained
by the SEC at http://www.sec.gov. Copies of the documents filed
with the SEC by Elanco will be available free of charge on Elanco's
internet website at www.elanco.com or by contacting Elanco's
Investor Relations Department at (317) 383-9935. Copies of the
documents filed with the SEC by Aratana will be available free of
charge on Aratana's internet website at www.aratana.com or by
contacting Aratana's Investor Relations Department at (913)
353-1026.
Participants in the Merger Solicitation
Elanco,
Aratana, their respective directors and certain of their executive
officers and employees may be considered participants in the
solicitation of proxies in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of the
Aratana stockholders in connection with the proposed merger and a
description of their direct and indirect interests, by security
holdings or otherwise, will be set forth in the proxy
statement/prospectus when it is filed with the SEC. Information
about the directors and executive officers of Elanco is set forth
in its proxy statement for its 2019 annual meeting of shareholders,
which was filed with the SEC on April 3,
2019. Information about the executive officers of Aratana is
set forth in its Annual Report on Form 10-K for the year ended
December 31, 2018 which was filed
with the SEC on March 13, 2019 and
additional information about its executive officers and information
about its directors is set forth in its proxy statement for its
2019 annual meeting of stockholders, which was filed with the SEC
on April 19, 2019.
ARATANA
THERAPEUTICS, INC.
|
Consolidated
Statements of Operations (Unaudited)
|
(Amounts in
thousands, except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
Licensing and
collaboration revenue
|
|
$
|
3,387
|
|
$
|
1,706
|
Product
sales
|
|
|
3,973
|
|
|
2,337
|
Total
revenues
|
|
|
7,360
|
|
|
4,043
|
Costs and
expenses
|
|
|
|
|
|
|
Cost of product
sales
|
|
|
1,519
|
|
|
536
|
Royalty
expense
|
|
|
1,692
|
|
|
806
|
Research and
development
|
|
|
1,775
|
|
|
2,205
|
Selling, general and
administrative
|
|
|
9,193
|
|
|
7,699
|
Amortization of
intangible assets
|
|
|
143
|
|
|
130
|
In-process research and
development
|
|
|
—
|
|
|
500
|
Total costs and
expenses
|
|
|
14,322
|
|
|
11,876
|
Loss from
operations
|
|
|
(6,962)
|
|
|
(7,833)
|
Other income
(expense)
|
|
|
|
|
|
|
Interest
income
|
|
|
174
|
|
|
141
|
Interest
expense
|
|
|
—
|
|
|
(853)
|
Other income (expense),
net
|
|
|
1
|
|
|
(3)
|
Total other income
(expense)
|
|
|
175
|
|
|
(715)
|
Net
loss
|
|
$
|
(6,787)
|
|
$
|
(8,548)
|
Net loss per share,
basic and diluted
|
|
$
|
(0.14)
|
|
$
|
(0.19)
|
Weighted average
shares outstanding, basic and diluted
|
|
|
48,277,129
|
|
|
44,788,068
|
|
|
|
ARATANA
THERAPEUTICS, INC.
|
Consolidated
Balance Sheets (Unaudited)
|
(Amounts in
thousands)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash, cash equivalents
and short-term investments
|
|
$
|
37,057
|
|
$
|
42,671
|
Accounts receivable,
net and prepaid expenses and other current
assets
|
|
|
6,037
|
|
|
4,031
|
Inventories
|
|
|
10,828
|
|
|
11,425
|
Total current
assets
|
|
|
53,922
|
|
|
58,127
|
Property and
equipment, net
|
|
|
575
|
|
|
693
|
Operating lease
right-of-use asset
|
|
|
744
|
|
|
—
|
Goodwill
|
|
|
40,846
|
|
|
40,846
|
Intangible assets,
net
|
|
|
7,956
|
|
|
6,099
|
Restricted
cash
|
|
|
351
|
|
|
351
|
Other long-term
assets
|
|
|
318
|
|
|
320
|
Total
assets
|
|
$
|
104,712
|
|
$
|
106,436
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
|
$
|
7,698
|
|
$
|
5,557
|
Current portion –
operating lease liability
|
|
|
398
|
|
|
—
|
Total current
liabilities
|
|
|
8,096
|
|
|
5,557
|
Operating lease
liability
|
|
|
398
|
|
|
—
|
Other long-term
liabilities
|
|
|
—
|
|
|
57
|
Total
liabilities
|
|
|
8,494
|
|
|
5,614
|
Stockholders'
equity:
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
96,218
|
|
|
100,822
|
Total liabilities and
stockholders' equity
|
|
$
|
104,712
|
|
$
|
106,436
|
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SOURCE Aratana Therapeutics, Inc.