Aratana therapeutics trichies

TRICHIES Alexandre
Advanced Master in Biotechnology & Pharmaceutical Management
Alexandre.Trichies.Ipb@gmail.com
Competitive Intelligence Analysis – February 2018

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Brief Overview of the company:
Main Events since Aratana’s founding
Figure 1: Schematic overview of Aratana Therapeutics main events

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Table of contents
I. Company and market overview: ......................................................................................4
A. Overview of the company:...........................................................................................4
B. Market Overview:........................................................................................................4
II. Company profile and current strategy: ............................................................................7
A. Aratana Corporate culture:..........................................................................................7
B. Aratana’s management team: (as described on Aratana website on the 19th
of January
2019)..................................................................................................................................8
C. Aratana acquisitions: .................................................................................................10
D. Marketed Products: ...................................................................................................12
III. ARATANA financing analysis:......................................................................................16
A. Income statement .....................................................................................................16
B. Capital structure and financial ratios: ........................................................................17
C. Share Price and evolution of Aratana overtime:.........................................................19
IV. What about Aratana’s Futur:......................................................................................21
A. Aratana Pipeline and potential value: ........................................................................21
B. What are the future risks for Aratana: .......................................................................22
C. SWOT Analysis of Aratana Therapeutics:....................................................................23
D. How do we see Aratana future?.................................................................................24

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Table of figures
Figure 1: Schematic overview of Aratana Therapeutics main events.......................................1
Figure 2: Veterinary healthcare market overview...................................................................6
Figure 3: Twitter Pictures of Aratana: "Super-Hero" Dogs and Halloween Day........................7
Figure 4: Aratana Therapeutics news releases overtime on the company webpage................7
Figure 5: Aratana Top management on the 19th
of January 2019............................................8
Figure 6: Summary of Aratana products on the market ........................................................12
Figure 7: Aratana revenue and net income from 1st quarter 2015 to 3rd quarter 2018........16
Figure 8: Expenses in R&D and SG&A from 1st quarter 2014 to 3rd quarter 2018 ................17
Figure 9: Aratana capital structure from 2013 to 2017 .........................................................18
Figure 10: Aratana stock price fluctuation from 2015 to 15th
of February 2019. Extract from
Yahoo Finance, NASDAQ: PETX.............................................................................................20
Figure 11: Aratana Pipeline summary, adapted from the company website .........................21
Figure 12: SWOT Analysis of Aratana therapeutics ...............................................................23
Figure 13: Four Corners Analysis of Aratana Therapeutics....................................................28

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I. Company and market overview:
A. Overview of the company:
Aratana therapeutics, which means “new beginning”, is a company focusing on delivering
safe and effective therapeutics for pets. Within only 9 years of existence, they succeeded to
acquire 2 companies and to have three different products on the US market. Their strategy is
simple: Identify scientific knowledge and medical advance in human health and investigate
their relevance for pets.
Aratana based its business plan on three simple observations:
1. There is a lack of resources available to develop medical treatments for pets with
chronic diseases.
2. There are many drugs which fill those medical needs in human medicine.
3. Many drugs can be easily transferred from human to pets
With a team of expert with a strong experience in human and animal health, Aratana is at
the interface of human science and veterinary medicine, allowing them to find the best
human drug development opportunities and apply them to pets.
As chronic diseases and pet welfare is a growing market, Aratana acts with an opportunist
strategy: As observed on their webpage, they do not restrain themselves on a specific
chronic disease and are looking for opportunities in many area of pet health: (Aratana
partnering n.d.)
Allergy/Inflammation, Anemia, Behavior, Cachexia, Cancer, Cardiovascular Disease, Dental
Diseases, Diabetes, Epilepsy, GI Diseases, Glaucoma, Hyperthyroidism, Kidney Diseases, Lung
Diseases, Osteoarthritis, Pain Management, Pancreatitis, Urinary Tract Disorders
As a way to understand Aratana strategy and their business plan, we will first describe the
pet market opportunities, then the possibilities offered by crossover drugs and finally the
competition on this market.
B. Market Overview:
1. Pet Health, Gold mine?
Animal health is an entire industry which can be divided in two main categories: companion
animals including cat, dog, horse and food-producing animals / livestock such as cattle, pigs
or chickens. This industry has many major missions in our society such as improving our pets
health but also secure livestock, mainly with preventive vaccines to avoid zoonoses (One-

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health program). The U.S animal health market represents 2% of the total U.S.
pharmaceutical market with 10 billion dollar in revenues and nearly 60% of this market are
companion animal products, representing 6 billion $. (Nam Pham 2018, p5)
Whereas the health cost per food-producing animals tends to decrease for economic
reasons, health cost for pets have increased for the last couple of years. This increase is
mainly linked with how people view their pets. (Brulliard 2016) Almost all dog and cat
owners view their pets as members of their family (95%). In USA, 67% of households own a
pet, with approximately 90 million dogs and 94 million cats. (Nam Pham 2018, p10)
Owners are increasingly aware of pet health and nutrition and are routinely seeking
veterinary services. Their willingness to pay in order to improve the quality of life of their
pets have created a growing demand for different drugs and varied therapeutic indications.
Over the past three years, 34 drugs were approved for the companion animals, reflecting the
attractiveness of the field. (Patil 2018) Moreover, in the last two decades, on the 7 animal
healthcare blockbuster (representing more than 100 millions in annual sales), 5 of them
were for companion animals. With an estimated growing potential at a CAGR of 6,2%
(Companion Animal Healthcare Market By Product Type (Feed Additives, Pharmaceuticals,
And Vaccines) And By Region - Global Growth, Trends, And Forecast To 2024 2018), pet
health market is a promising field with many opportunities.
2. Crossover drugs :
Crossover drugs are drugs which can be easily transferred between animal and human
health. The idea of sharing drug pipelines, resources, and intellectual properties, within the
human and animal health divisions can be explained easily: Out of the top 5 global animal
healthcare players, 4 are divisions of a big pharmaceutical company. Crossovers drugs are an
opportunity for pharmaceutical company to increase their revenues with a new market with
little or low investment.
Dogs and cats have been used for many years as a way to study drug mechanism for human
disease and are for some areas better model of disease than rodents, as for example
neoplasia or allergic diseases as atopic dermatitis. With pre-clinical development done on
pets, all data on efficacy, safety and pharmacokinetics are already available for a further
submission on the animal health market.
Many examples of advances in human medicine have been successfully applied to the
treatment of dogs and cats such as antibiotics, anesthetics, anti-inflammatory, antifungals,
pain killer, etc. (Horspool 2013)
3. Market competition:
The global animal health market is strongly consolidated with the top 10 players having 86%
(Patil 2018) of the market share. The market has seen many acquisitions and mergers, with
for example the recent acquisition of Merial by Boehringer Ingelheim. (Staton n.d.)

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Figure 2: Veterinary healthcare market overview
As we have seen before, Aratana business plan of bringing human drugs to pet market is not
something new, and have been developed for many years by the leaders in the animal
health market. A few smaller market players, like Kindred and VetDC, are also ‘petifying’
human drugs. Kindred (Market cap of 418.72M on the 16/02/2019) being a company
focusing on weight loss in cats and VetDC (private) working on experimental human cancer
drugs as options for pet cancer treatments.
Even if the pet market in an interesting market with an important dynamism, Aratana is not
the only one in the field with many bigger companies in the same field.

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II. Company profile and current strategy:
A. Aratana Corporate culture:
To understand Aratana culture and the image they want to reflect, social media and
company webpage are a great tool: Aratana mainly communicate with Twitter, delivering
news every two weeks approximately. A LinkedIn corporate page is also active but only
shares investment and financial news. By looking at the twitter page and the different
released articles in the past year, two main points appears clearly: (Aratana Twitter Account
(@AratanaRx) n.d.)
- Pets are not just animals, they are our family: Many events to humanize dogs and
cats can be found on their page: Participation to Christmas gift for animal, « super-
hero » costume for dogs, Halloween costume, National pet day…
Figure 3: Twitter Pictures of Aratana: "Super-Hero" Dogs and Halloween Day
- A strong communication on inappetence in dogs, which is reported to affect 25% of
dogs and can be cured thanks to their last commercially available product named
ENTYCE.
However, the company website gives a totally different perspective of the company :
Figure 4: Aratana Therapeutics news releases overtime on the company webpage
5
11 22 12
5
6
9
20182017201620152014
ARATANA NEWS RELEASES OVERTIME
Events Stories News

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Indeed, only little news has been released for the last two years. (Aratana news n.d.)
No strong conclusion can be given as this absence can be due to few people going on the
website, making the company focusing on more modern way of providing information such
as Twitter.
B. Aratana’s management team: (as described on Aratana website on the 19th of
January 2019)
1. Leadership team
Figure 5: Aratana Top management on the 19th of January 2019
As said previously, Aratana business model is based on applying medicine to pets, requiring
experts with experience in human health, animal health and biotechnology.
The top management of Aratana was described as it was on the 19th
of January 2019.
(Aratana Leadership n.d.)
- Steven St. Peter is the President and CEO of Aratana Therapeutics since 2012. After a
medical degree from the Washington University and an MBA in healthcare
management, Steven St. Peter worked for many years in different private equity
companies as Apax Partners and MPM Capital. In 2010, he joined Aratana as a
member of the board of director before taking the CEO position two years later.
Interestingly, before taking his position in Aratana therapeutics, he had no previous
experience in an animal healthcare company.
- Craig Tooman is the Chief Financial Officer of Aratana since 2013. He previously held
the position of CEO of a private company on human oncology opportunities and was
Steven St.
Peter
CEO
John Ayres
General counsel
Jeff Jones
VP business dev.
Ernst
Heinen
CDO
Chris Ready
VP sales/marketing
Craig
Tooman
CFO

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before CFO for a company selling nitric oxide. As Steven St. Peter, he has no previous
experience in animal health.
- John Ayres is General Counsel and secretary of Aratana since 2013. After earning his
juris doctorate degree, he has represented pharmaceutical and medical device
companies such as Amgen for more than ten years.
- Jeff Jones is the vice president of business development of Aratana since 2015.
Following his Ph.D, he worked for a venture capital fund and for a pharmaceutical
company.
They both had no experience in the veterinary field before Aratana but have a solid
experience in pharmaceutical companies.
- Ernst Heinen, chief development office and Chris Ready, vice president of sales and
marketing are the only two top management members with a previous experience in
the veterinary industry. Ernst Heinen entered Aratana in 2012 and was previously
vice president of R&D and veterinary technical services at Bayer Animal Health. Chris
Ready, on his side, entered Aratana in 2018 and was previously Senior director of
Companion Animal Global Marketing at Elanco (leaved Elanco after initial public
offering).
2. Board of Director:
The high ratio of human health to veterinary health is exacerbated when we look at the
members of the board of director. Only one out of nine members is coming from the animal
health industry: Merilee Raines, the CFO of IDEXX laboratories (see Annex 1)
To sum up Aratana’s leadership team and board of director:
- Most of the member are from the healthcare industry
- Most of them have a strong background in finance or venture capital and less
experience in a research-based company
As none of them is specialized in research and veterinary products, Aratana needed to
rapidly find a way to increase their IP and their pipeline. As we will see in the next part,
Aratana have chosen an acquisition strategy to increase their value and their potential. With
less than four years of existence, they acquired two companies which were founded two and
three years before them.

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C. Aratana acquisitions:
1. Vet Therapeutics:
• The company
Before its acquisition by Aratana in 2013, Vet therapeutics
was a private company founded in 2008 with its
headquarter in San Diego. (Bloomberg: Company Overview
of Vet Therapeutics n.d.)
The company is specialized in the development of antibody-based therapies for chronic
diseases and cancer for veterinary application. At the time of the acquisition, Vet
therapeutics had six different programs for the treatment of : B-cell lymphoma, T-cell
lymphoma, mast cell tumor, atopic dermatitis and feline melanoma.
Vet therapeutics president and CSO, Dr. Genevieve Hansen, became head of biologics of
Aratana after the acquisition. However no news have been found on her since an Aratana
press release from 2015.
• Pipeline and Potential Value:
Four patents have been published by Vet therapeutics before its acquisition by Aratana.
All of them were on the development of monoclonal antibodies to treat cancer and
inflammatory disease as atopic dermatitis with a focus on CD20 and CD52.
Publication
Date
Patent
Chemical or
Biological
Domain
04/03/2010
MONOCLONAL
ANTIBODIES DIRECTED
TO CD20
Biologics
Cancer, method of treating
canine lymphoma
04/03/2010
MONOCLONAL
ANTIBODIES DIRECTED
TO CD52
Biologics cancer and inflammatory
04/09/2008
MONOCLONAL
ANTIBODIES
Biologics
methods for engineering
heterochimeric antibodies
25/03/2009
ANTIBODY CONSTANT
DOMAIN REGIONS AND
USES THEREOF
Biologics Cancer, method to treat tumor
(Patents extracted from Patbase software)
With this acquisition, Aratana goal was to add biologics to its therapeutic platform but also
accelerate its potency to become a commercial-stage pet therapeutic company, specifically
on the lymphoma market.
Indeed, lymphoma is the most common blood cancer in dogs, representing around 6% of
dog cancer. With the only substitute to this treatment being chemotherapy, costing between
3500$ and 10000$, biologic treatment could be a huge opportunity on this market. (Aratana
Agrees to Acquire Vet Therapeutics, Inc n.d.)

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2. Okapi :
• The company
A few months after the acquisition of Vet
therapeutics, Aratana acquired Okapi Science, a
private company founded in 2007. (Aratana
Therapeutics Acquires Okapi Sciences NV n.d.) Okapi
Science is a Belgium-based KU Leuven (catholic university of Leuven) spin-off company, with
a proprietary pet therapeutics antiviral platform and different drug candidates for the
treatment of viral diseases. While Okapi Science was looking for a second investment round
in 2013, a meeting with Aratana’s CEO have led to a mutual interest between the two
companies. In December of 2013, Okapi cancelled its investment round as the acquisition by
Aratana was more attractive to them. This acquisition had two major benefits: secure their
activities by bringing the molecules closer to the market and maintain the research activities
of the company in Leuven, Belgium.
Erwin Blomsma, the co-founder and CEO of the company, has joined Aratana as Vice
President. Goris Nesya, the CSO of Okapi also joined Aratana as general manager.
However, both of them have since leaved the company, Erwin Blomsma in December 2016
and Goris Nesya in December 2018, to create together a new company named ViroVet.
(Linkedin ViroVet n.d.) and (KU Leuven, Spin-off companies n.d.)
• Pipeline and Potential Value:
Three patents have been published by Okapi Science before its acquisition by Aratana. All of
them are focused on the company expertise in chemical compounds for antiviral activity in
pets.
One patent describes methods to prepare cyclopropane derivatives and the two others
focus on parvovirus and herpetic eye infection. (See table)
Publication Date Patent
Chemical or
Biological
Domain
20/01/2012 EYE DROP COMPOSITION Chemical
Herpetic eye
infection
24/02/2012
COMPOUNDS FOR TREATING
PARVOVIRUS INFECTION
Chemical
Parvovirus
infection
10/11/2011
METHOD FOR PREPARING
CYCLOPROPANE DERIVATIVES
Chemical Antiviral activity
(Patents extracted from Patbase software)
This strategic acquisition is interesting as it allows Aratana to develop an expertise in
chemical compounds few months after the acquisition of a company with an expertise in
biologics. The acquisition of an European company could also expand their presence on an
important market for pet therapeutics (second market after the US).
Market opportunity: There is no current approved species-specific antiviral drug for
numerous viral infections in pets whereas millions of them are infected. Okapi’s lead

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antiviral, a treatment of ocular disease caused by feline herpes virus, could become the first
antiviral small molecule therapeutic developed specifically for veterinary use. (KU Leuven,
news n.d.)
3. Aratana IP
In addition to the patents obtained with the acquisition of two companies, Aratana
developed four patents:
- Two patents in 2014 on the composition of grapiprant, for inflammatory pain
- Two patents on appetence with a first patent in 2012 and a second one in 2015.
The four patents are linked to two commercial products of Aratana: Galliprant® (grapiprant
tablets) and Entyce® that we will develop further below:
D. Marketed Products:
Between the end of 2016 and the end of 2017, Aratana succeeded to launch three products:
Figure 6: Summary of Aratana products on the market

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1. NOCITA:
NOCITA® (bupivacaine liposome injectable
suspension) is a long-acting local anesthetic approved
for human use and now approved for dogs. This first
product is totally in Aratana strategy which is to bring
human medicine to pets.
NOCITA is also Aratana’s first product to hit the
market and was launched in late 2016.
The first indication for this product is post-operative analgesia for cranial cruciate ligament
surgery for dogs. Aratana also submitted the product for a second indication in cats which
was approved in march 2018. (Aratana Granted FDA Approval of NOCITA® n.d.)
• NOCITA revenues:
With a net product sales of $2,8 million in 2017 compared to only $100 000 in Q4 of 2016
when the product was launched and already $5,1 million in three quarter of 2018, Nocita
sales have increased sequentially since its launch. (Form 10Q_Q3_2018 2018, p45)
From the company information, this increase is a result of new accounts and strong re-
orders rates of approximately 65% in 2017.
It may also be related to its use as an alternative to opioids as mandated by the US Drug
Enforcement Agency for veterinary applications.
With the extension of the label in march 2018 to cats, we can also expect the sales to have a
strong increase in the end of 2018 and in 2019.
• Substitute and competition of the market:
Substitute: NOCITA competes primarily with existing analgesics that are part of multi-modal
pain protocols, including local anesthetics, opioids and cox-inhibiting NSAIDs.
0,1 0,3 0,6 0,7
1,1
1,5
1,7
1,9
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018
NOCITA revenues (Million $)

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2. GALLIPRANT:
GALLIPRANT is used for the control of pain and inflammation
in the earliest diagnosed stages of canine osteoarthritis. It is
a first-in-class prostaglandin receptor antagonist, a non-COX
inhibiting NSAID that specifically targets the EP4 receptor.
GALLIPRANT is commercially available since the first quarter of 2017. Elanco Animal Health
has licensed the rights to Galliprant giving them exclusive, global rights to manufacture,
market and commercialize Galliprant, and the ability to co-promote the product with
Aratana in the United States, according to the company release.
• GALLIPRANT Revenues :
The revenues above are only linked to Aratana own sales, and do not include milestone or
manufacturing payment from Elanco. (Form 10Q_Q3_2018 2018, p46)
We can also record different financial transactions thanks to the strategic partnership with
Elanco: (AnimalPharm n.d.)
• An upfront payment of $45M for licensing rights to Galliprant
• $15.5M in sales of Galliprant to Elanco prior to Elanco assuming manufacturing
responsibility and a one-time $1.0M manufacturing payment
• $4M milestone for market approval in Europe
• $15M milestone for Aratana net sales exceeding $35M
This strategic partnership is a great way for Aratana to increase its sales of Galliprant. As
Aratana is a small company with a limited sales force, giving the right to Elanco enables them
to extend internationally with no risk. Moreover this strategy provides a strong visibility to
the product and by extension Aratana.
Different substitutes on the market are possible. The collaboration with Elanco offers
Aratana a strong way to fight it and implement their product on the market.
0,9 0,8
1,2
1,5
1,7
1,9
3,4
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
GALLIPRANT revenues (Million $)

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3. ENTYCE:
ENTYCE is a selective ghrelin receptor agonist which mimics
the body’s naturally occurring ghrelin, an “Hunger hormone”,
to stimulate dog appetite. ENTYCE is commercially available
since October 2017 and is the first FDA approved appetite
stimulant for dogs. (Weintraub n.d.) The only substitute at
that time was Mirtazapine, a human generic antidepressant,
used for weight gain in cats.
• ENTYCE revenues:
Approximately two months after its launch, ENTYCE revenues were $1,3M, which were
related to stocking orders to distributors. As the product was only sold for two months in
2017, it could also explain why the revenue decreased in Q1 2018. Aratana succeeded to
place its product in 3,600 clinics with an initial objective of 1,800 clinics. (Form
10Q_Q3_2018 2018, p43)
However, Aratana also planned to focus on growing the number of accounts, driving re-
orders and increasing days of use. From the data above, it seems than they did not succeed
to increase the number of account or increase re-orders as the revenues is stable until the
Q3 2018.
Mirtazapine a human generic antidepressant and a company is pursuing FDA approval for a
mirtazapine for weight gain in cats.
1,3
0,8
1,2 1,2
Q4 Q1 Q2 Q3
2017 2018
ENTYCE revenues (Million $)

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III. ARATANA financing analysis:
A. Income statement :
Figure 7: Aratana revenue and net income from 1st quarter 2015 to 3rd quarter 2018
By looking at Aratana revenue and net income overtime, it is interesting to see the company
moving slowly from R&D to sales. With three products on the market, Aratana begun to
have revenue since 2017. Unfortunately those revenue are not sufficient for now to support
its expenses. (Aratana Therapeutics Income Statement n.d.)
Indeed, Aratana only had two times a positive net income:
- In the second quarter of 2016, when Aratana licensed the animal rights of Galliprant
to Elanco (Eli Lilly animal health division) with an upfront payment of $45M. Elanco
was given the exclusive rights to develop, manufacture and market Galliprant
globally and co-promote the product with Aratana in USA.
- In the third quarter of 2018, when Aratana received $15M commercial milestone
from Elanco as a threshold of Galliprant net product sales exceeded $35M.
As said before, Aratana is slowly moving to a commercial company. We can confirm this
transition by looking at the expenses in R&D compared to SG&A. Since the end of 2016, R&D
expenses are decreasing whereas SG&A are increasing to promote the sales of their three
products. The decrease in R&D could also be a consequence of the failure in phase 3 of one
of Aratana product, leading to a drop in Aratana shared price.
-80
-60
-40
-20
0
20
40
60
80
30/09/2018
30/06/2018
30/03/2018
30/12/2017
30/09/2017
30/06/2017
30/03/2017
30/12/2016
30/09/2016
30/06/2016
30/03/2016
30/12/2015
30/09/2015
30/06/2015
30/03/2015
REVENUE AND NET INCOME OF ARATANA
Revenue net income

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Figure 8: Expenses in R&D and SG&A from 1st quarter 2014 to 3rd quarter 2018
B. Capital structure and financial ratios :
With the annual report for 2018 not yet published, I will only talk of Aratana capital
structure from 2013 to 2017.
It is firstly interesting to see that Aratana has moved from a company with few debts and
high shareholders equity to a company with almost the same amount of them. As Aratana
has products on the market and revenues, they can now use banks as a way to finance their
activities. Indeed, they are less risky than a young biotech with important R&D and no
product on the market.
Years
Mean 1st
-3rd
quarter 2018
2017 2016 2015
Dept on equity
ratio
0,3 0.4595 0.4445 0.391
The Debt/Equity ratio is quite stable for the last three years. Here the ratio is about 0,4 for
the three past years, which is an acceptable ratio, who doesn’t need any corrective action.
If the ratio was too low, the company will not fully use the cheaper source of finance. On the
contrary, if the ratio was too high: 0,8 or 0,9, the company will be in a high financial risk.
Indeed contracting debt is more risky for a firm as they have an obligation to reimburse it
overtime. By using debts over equity, Aratana can also minimize the taxes on their sales as
taxes are deductible.
0
2
4
6
8
10
12
01/03/2014
01/05/2014
01/07/2014
01/09/2014
01/11/2014
01/01/2015
01/03/2015
01/05/2015
01/07/2015
01/09/2015
01/11/2015
01/01/2016
01/03/2016
01/05/2016
01/07/2016
01/09/2016
01/11/2016
01/01/2017
01/03/2017
01/05/2017
01/07/2017
01/09/2017
01/11/2017
01/01/2018
01/03/2018
01/05/2018
01/07/2018
01/09/2018
R&D Trends vs SG&A Trends overtime
R&D SG&A expenses

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Figure 9: Aratana capital structure from 2013 to 2017
Financial ratios analysis:
In order to estimate the risks encountered by the company, we can calculate different ratios
(Macrotrends_PETX_ratios n.d.) that give us information on its financial situation:
The current ratio is a liquidity ratio, which measures if a firm has enough resources to meet
its short term obligations by comparing its current assets to its current liabilities. The current
ratio of Aratana in 2016 was 2,9, in 2017 2,4 and an average of 3,15 for the three first
quarter of 2018. This means that Aratana current assets are sufficient to cover 2 to 3 times
the amount of the company’s short term liabilities.
Return On Equity:
The ROE represents the profit available on the capital provided by shareholders.
Years
Mean 1st
-3rd
quarter 2018
2017 2016 2015
ROE -2,5% -59% -37% -82%
With a negative net income in the last three years, the ROE is obviously negative too. It is
difficult here to conclude on the ROE variations as Aratana received two times a high
amount of cash from Elanco for their product Galliprant. One in 2016, increasing significantly
the ROE and one in 2018. Moreover, Aratana contracted debt over equity to finance its
assets, which increases the ROE.
But the increasing sales of Aratana products will have a positive impact on the net income in
2019, with probably a positive ROE.
48,2
99,909 89,019 101,542 85,239
64,135
107,994
58,047 49,864
49,953
28,953
26,071
45,516
61,003
55,058
83,39
181,832
101,55
90,403
80,134
0
50
100
150
200
250
300
350
400
450
01/01/2013 01/01/2014 01/01/2015 01/01/2016 01/01/2017
CAPITAL STRUCTURE OF ARATANA OVERTIME
Total current assets Total non-current assets total liabilities total Share Holders Equity

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C. Share Price and evolution of Aratana overtime:
The share price of a company reflects the major events of its life.
At the date of 18 of February 2019, the market cap of Aratana is $214,9M with 48,6M share
at a price of $4,42. (PETX share price n.d.)
The share price of Aratana is quite stable since 2016 after a big drop of share price in
September 2015, let’s first understand this major event:
Aratana based one part of its value on canine lymphoma treatment with the acquisition of
Vet Therapeutics in 2013. As a reminder, lymphoma is the most common blood cancer in
dogs, representing around 6% of dog cancer. With a cost between $3500 and $10 000, a
treatment could be a huge market opportunity. In September 2015, Aratana completed an
analysis on AT-004 and AT-005, their two monoclonal antibodies on canine lymphoma, with
mixed clinical and scientific results, suggesting they were not as specific to the targets as
expected. (Aratana Product Update n.d.) The share price immediately felt from $17,6 to
$3,3.
With no other potential high-value product, Aratana share price did not fluctuate a lot since
then: highest value at $9,4 (September 1st, 2016). This highest value is probable linked to
Aratana partnership with Elanco in March 2016.
It is interesting to underline the small impact of the three products marketed between the
end of 2016 and the end of 2017. With only small revenues of each products, inferior to $2M
per quarter, the share price did not reacted positively.
A new drop of share price in early 2019 (from $5,6 to $3,3) also tell us a new story about
Aratana which is important for its future financial risk:
- Engaged Capital LLC, an activist investor has decreased its stake in Aratana by about
50% between August 2018 and January 2019, going from 8% to 4% of Aratana
(Engaged Capital lowres stake in Aratana n.d.)
- Aratana’s COO, Brent Standridge retired from the company on December 31st 2018
(Lieberman n.d.)
- Aratana’s CEO since 2012, Steven St. Peter, has resigned from its role. Craig Tooman,
CFO of the company since 2013 have become the new CEO of Aratana. (Aratana New
CEO n.d.)
- Following Craig Tooman new position in the company, Aratana Therapeutics
Appoints Rhonda Hellums Chief Financial Officer on Feb. 4, 2019

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Figure 10: Aratana stock price fluctuation from 2015 to 15th of February 2019. Extract from Yahoo Finance, NASDAQ: PETX

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IV. What about Aratana’s Futur:
A. Aratana Pipeline and potential value:
Figure 11: Aratana Pipeline summary, adapted from the company website
Four products are currently in Aratana pipeline:
1. AT-002:
For now, AT-002 (ENTYCE) is only sold for dogs. As a way to optimize their research and
increase the revenue, Aratana submitted a technical section for safety to the FDA for cats. By
developing their products for both cats and dogs, Aratana could expect to double its current
revenue on the product. With a current average revenue of $1,2M/quarter, Aratana could at
least expect $9,6M per year revenue, without taking into account a potential increase of
sales.
2. AT-006:
AT-006 is an anti-viral for the treatment of feline herpesvirus. This anti-viral is coming from
Okapi Sciences acquisition in 2014. As a reminder, Aratana acquired Okapi for its expertise in
viral treatment. For the 10-K report of 2017, Aratana reported to further the delay for the
development of this product due to their inability to raise additional capital. With the
product only in pivotal study and no news in the 2018 quarterly reports, we can expect the
product no to be on the market before probably 2021.

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3. AT-018:
AT-018 is an oral CRTH2 antagonist for the potential treatment of atopic dermatitis in dogs.
The active pharmaceutical ingredient is licensed from Atopix which granted Aratana an
exclusive global license for the development and commercialization of animal health
products containing it. Aratana is planning to complete the target enrollment in mid-2019.
4. AT-014:
AT-014 is a canine Osteosarcoma vaccine. AT-014 is coming from a license agreement with
Advaxix that granted Aratana the global rights for the development and commercialization
of Advaxix’ ADXS-cHER2. As AT-014 is a vaccine, it is under the USDA (United States
Department of Agriculture) regulation. For now, AT-014 is under conditional licensure and is
available in two dozen veterinary oncology practice groups participating in the study
(DVM360 n.d.). No information on a full licensure date have been given by Aratana.
5. Potential value:
To summarize Aratana pipeline, two products may come fairly soon on the market: Entyce
(AT-002) for cats and AT-014 for canine osteosarcoma vaccine. Those two products could
improve significantly Aratana revenue and improve its net income to finance the other two
products in the pipeline.
However we need to underline that those two products do not have a strong potential and
we can only expect them to do as good as the three products on the market. The two
biologics for canine lymphoma, acquired from Vet therapeutics are unfortunately not
anymore in the pipeline or in the annual report.
B. What are the future risks for Aratana:
1. Competition on products:
The development of new animal health products is highly competitive. Major
pharmaceuticals companies could rapidly market products for the same applications.
Moreover, as a big company, they could drastically reduce the cost of production, allowing
them to sell a cheaper product. They could also have aggressive marketing campaigns to
become the leader.
2. Manufacturing:
As a little company, Aratana do not manufacture itself its products. They rely on
manufacturers for the development of therapeutics candidates and to produce their
products on the market.

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3. Management of the group:
From December 2018 to early January, Aratana had to overcome many changes in its top
management structure. The COO of the group retired and the CEO leaved, letting Aratana in
the hand of the CFO. We don’t know yet if he will succeed to keep Aratana on tracks
4. Potential sales:
As a small commercial organization, Aratana do not have the required sales force to expand
to all the markets. The direct impact is a weak revenue on their products. As a example, we
can simply compare Aratana and Elanco sales on the same products: Elanco recorded
approximately $18M in net product sales in the third quarter of 2018 for Galliprant, whereas
Aratana reported for the same period $3,4M.
We could talk here of a downward cycle: As many small health-tech companies, Aratana do
not succeed to sell as much as they could because they only have a small sale force. The
weak revenues prevents the company from investing in new studies. With no new product
on the market, the company can’t increase its revenues.
C. SWOT Analysis of Aratana Therapeutics:
Figure 12: SWOT Analysis of Aratana therapeutics

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D. How do we see Aratana’s future?
In order to avoid bankruptcy and break the downward cycle, Aratana needs to raise money.
Different strategies could have a favorable impact on Aratana:
- The first solution would be to count on Aratana sales to increase overtime and wait
for future milestone form Elanco. Unfortunately it may not be enough to support
Aratana‘s future
- Another solution could be to license the two other products on the market to a big
company as Elanco, increasing Aratana sales while decreasing SG&A spent. The
revenues could go back to Aratana’s R&D to develop new products.
- Aratana could also try to raise money from investors. This round of financing could
be a wash-out round, as Aratana has difficulties to raise money. This new round
could dilute drastically the ownership of previous investors and owners.
- A last possible option is to sell the company. Some sources said that Aratana could be
exploring this option (SeekingAlpha n.d.). It could be interesting for the company in
2019, with one or two more quarters. An increased revenue would reassured the
stockholders, allowing growth of share price and a better possible takeover.

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Bibliographie
AnimalPharm. n.d. Aratana revenues climb on back of strong Galliprant performance.
http://kcanimalhealth.thinkkc.com/news/media-coverage/aratana-revenues-climb-
on-back-of-strong-galliprant-performance.
n.d. Aratana Agrees to Acquire Vet Therapeutics, Inc. Accessed January 15, 2019.
https://aratana.investorroom.com/2013-10-14-Aratana-Agrees-to-Acquire-Vet-
Therapeutics-Inc.
n.d. Aratana Granted FDA Approval of NOCITA®. Accessed January 22, 2019.
https://www.aratana.com/nocita-bupivacaine-liposome-injectable-suspension/.
n.d. Aratana Leadership. Accessed January 2019, 19.
https://www.aratana.com/about/leadership/.
n.d. Aratana New CEO. https://aratana.investorroom.com/2019-01-17-Aratana-
Therapeutics-Board-of-Directors-Appoints-Craig-Tooman-Chief-Executive-Officer.
n.d. Aratana news. Accessed February 22, 2019. https://www.aratana.com/news/.
n.d. Aratana partnering. Accessed 02 22, 2019.
https://www.aratana.com/about/partnering/.
n.d. Aratana Product Update. https://aratana.investorroom.com/2015-09-24-Aratana-
Therapeutics-Provides-Product-Updates.
n.d. Aratana Therapeutics Acquires Okapi Sciences NV. Accessed January 20, 2019.
https://aratana.investorroom.com/2014-01-06-Aratana-Therapeutics-Acquires-
Okapi-Sciences-NV.
n.d. Aratana Therapeutics Income Statement.
https://www.macrotrends.net/stocks/charts/PETX/aratana-therapeutics/financial-
ratios?freq=Q.
n.d. Aratana Twitter Account (@AratanaRx). Accessed february 2019, 15.
https://twitter.com/aratanarx?lang=en.
n.d. Bloomberg: Company Overview of Vet Therapeutics. Accessed january 10, 2019.
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=2482
98401.
Brulliard, Karin. 2016. "Americans are spending more on health care — for their pets."
Washington Post 2.
2018. Companion Animal Healthcare Market By Product Type (Feed Additives,
Pharmaceuticals, And Vaccines) And By Region - Global Growth, Trends, And Forecast
To 2024. October. Accessed january 15, 2019.
https://www.marketdataforecast.com/market-reports/global-companion-animal-
health-care-market-1249/.
DVM360. n.d. Aratana conditional approval for AT-014.
http://veterinarynews.dvm360.com/aratana-receives-conditional-approval-canine-
osteosarcoma-vaccine.
n.d. Engaged Capital lowres stake in Aratana.
https://thefly.com/landingPageNews.php?id=2847208&headline=PETX-Engaged-
Capital-lowres-stake-in-Aratana-Therapeutics-to--from-.
Form 10Q_Q3_2018. 2018. "Aratana SEC documents."
Horspool, Linda J.I. 2013. Animal Health Markets and Opportunities: Companion Animal
Landscape. Boxmeer, The Netherlands: MSD Animal Health.

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n.d. KU Leuven, news. Accessed January 20, 2019. https://lrd.kuleuven.be/en/news/aratana-
therapeutics-acquires-okapi-sciences/.
n.d. KU Leuven, Spin-off companies. Accessed January 15, 2019.
https://lrd.kuleuven.be/en/spinoff/cases/okapi-sciences.
Lieberman, Lily. n.d. Kansas Business Journal.
https://www.bizjournals.com/kansascity/news/2019/01/11/aratana-therapeutics-
coo-engaged-capital-stake.html.
n.d. Linkedin ViroVet. Accessed January 15, 2019.
https://www.linkedin.com/company/virovet/people/.
n.d. Macrotrends_PETX_ratios. https://www.macrotrends.net/stocks/charts/PETX/aratana-
therapeutics/financial-ratios?freq=Q.
Nam Pham, Mary Donovan. 2018. The Economic and Social Contributions of the Animal
Health Industry. ndp analytics.
Patil, Rajashree. 2018. "An Evolving Companion Animal Health Sector in the United States."
International Journal of Veterinary Science & Technology 2.
n.d. PETX share price. https://finance.yahoo.com/quote/petx?ltr=1.
SeekingAlpha. n.d. Aratana: Evaluating A Buyout Offer.
https://seekingalpha.com/article/4222129-aratana-evaluating-buyout-offer.
Staton, Tracy. n.d. FiercePharma_Merial&Boehringer. https://www.fiercepharma.com/m-
a/sanofi-plots-12-5b-merial-tradeoff-boehringer-gaining-consumer-unit-bargain.
Weintraub, Arlene. n.d. FDA approval of canine arthritis drug.
https://www.fiercepharma.com/animal-health/aratana-shares-soar-on-first-fda-
approval-of-canine-arthritis-drug.

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Annex 1: Aratana Board of Director (18th
of January 2019)
Name Function Previous experience
Experience in
animal health
industry
Entry at
Aratana
Wendy
Yarno
Chairperson and
member of Board of
Director
Merck&Co: 26 years in
commercial and human
resource positions, and was in
charge of supporting pre and
post launch commercialization
of pharmaceuticals
NO 2013
Craig A.
Barbarosh
member of Board of
Director
director for several public
companies and attorney ar a
large and international law
firm.
No 2018
Laura A.
Brege
member of Board of
Director
Managing director of a
healthcare advisory and
consulting company. And
before CEO of a company
based on a flow cytometry
platform.
No 2014
David L.
Brinkley
member of Board of
Director
Head of Business
Development in a
biopharmaceutical company
No 2014
Irvine O.
Hockaday Jr
member of Board of
Director
CEO of Hallmark Cards (sells
greeting cards and gifts)
No 2014
Merilee
Raines
member of Board of
Director
CFO of IDEXX laboratories Yes 2014
Lowell W.
Robinson
member of Board of
Director
CFO of several publicly traded
companies as an online
advertising network or a
strategic and financial
consulting firm
No 2018
Robert P.
Roche Jr
member of Board of
Director
Founding member of a
consulting firm in the
pharmaceutical and
healthcare industry.
No 2014
John W.
Vander
Vort
member of Board of
Director
Managing director in an
investment office and before
worked for a private equity
firm
No 2012

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Annex 2: Four corners Analysis of Aratana Therapeutics
Figure 13: Four Corners Analysis of Aratana Therapeutics

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