Media Coverage

Aratana sees first-quarter growth of 6.5% with drop in R&D expenses


May 04, 2018 - Animal Pharm
By Sian Lazell
Animal Pharm
May 4, 2018

Aratana Therapeutics has reported $4 million in revenues in the first quarter of 2018, along with a significantly lower net loss.

The US firm's revenues were up by 6.5%, while net loss in Q1 decreased by 32% to $8.5m – in line with a lower cost of product sales and a drop in R&D expenses.   

In Q1, Aratana reported Nocita sales of $1.5m, Entyce revenues of $0.8m and $1.7m in licensing and collaboration revenue from Elanco. The firm has a deal with Elanco for its Galliprant canine osteoarthtris product, which it signed in 2016. 

Cost of product sales was $0.5 million in Q1 2018, dropping 83%. This was largely due to Elanco assuming responsibility for manufacturing of Galliprant. 

Selling, general and administrative expenses saw a small increase to $7.7m. The firm said it expects expenditure in this area to remain relatively consistent throughout 2018.

R&D expenses totaled $2.2m in Q1, dropping 53%. Aratana attributed the decrease to fewer ongoing pivotal studies. 

Aratana's Q1 results are a strong continuation of a positive end to 2017, when it also saw an increase in revenues and a lower net loss in line with a drop in R&D expenses. 

As of March 31, 2018, Aratana had approximately $67.3m in cash, cash equivalents, restricted cash and short-term investments. The firm said it expects around $22m of additional cash to be used for ongoing operations and approximately $14.3m of cash to be used to cover its existing debt principal obligations for the rest of 2018. 

Commenting on Aratana's Q1 results, US investment firm William Blair's John Kreger said: "Of the company's three key products now on the market, Nocita delivered an impressive sequential step-up to $1.5m in sales, compared to our $1.3m target.

"Entyce and Galliprant met our expectations. R&D spend was $1.3m below our target, suggesting perhaps tighter cash management efforts." 

"Cash-on-hand at the end of the quarter was $67.3m, stable with December 31 levels. The company did raise $15.5 million during the quarter, so the implied cash usage was about $16m. Commentary about expected cash usage this year was unchanged at $36m, implying $31m should be available by year-end, augmented by another $15m from a Galliprant sales milestone. We believe this milestone will be earned this year (according to management commentary) but received in early 2019. 

"We believe a key question will be how much additional cash, if any, will be needed to reach breakeven. "Galliprant licensing and collaboration revenues of $1.7m exceeded our estimate by roughly $100,000. Partner Elanco did not disclose Galliprant sales for the first quarter (it reached $8m in the fourth quarter and $6m in the third quarter), but the total new product contribution (Galliprant is one of four products in this basket) continued to climb nicely in the first quarter, roughly doubling from a year ago." 

The investment firm concluded: "The next key catalysts for the company, in our view, are: start of European sales of Galliprant by Elanco, which we expect in the coming few months; European partnership for Entyce and Nocita, which we expect in 2018; eventual US FDA approval of Nocita's label expansion for cats, which we also expect in 2018; and a ramp-up in Entyce, Galliprant and Nocita sales. 

"We view the following as key risks for Aratana in the next three to five years: molecules under clinical development might not reach the market; the recently approved products might not gain traction commercially; and the company will need to raise additional capital."

Reprinted with permission of Animal Pharm News

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