Aratana Therapeutics Inc. (NYSEMKT:PETX) Might Be Better Than Some Think

Aratana Therapeutics Inc. (NYSEMKT:PETX)

Aratana Therapeutics Inc. (NYSEMKT:PETX) shares dropped over 21% today. Volumes were heavy – over seven times their daily average. PETX Closed Monday at $6.95 but when the regular session ended, the last print was at $5.32. Motivation was likely the financial release for Q4 and full year 2016 that exceeded expectations in some ways, but not in others.

Aratana Therapeutics Inc. (NYSEMKT:PETX) reported a Q4 net loss of $23.3 million or $0.64 diluted loss per share. In Q4 2015 Arantana reported a net loss of $12.9 million with a $0.43 per share loss. However, the Q4 2016 figure included $10.7 million in inventory adjustments and impairment of an intangible asset. Q4 revenues were posted at $292,000 which was much lower than the $923,000 that was expected by analysts who follow the company. For the full year of 2016, Aratana reported a net loss of $33.6 million or $0.95 diluted loss per share. Aratana has almost $89 million of cash on hand so it believes that operations will be fully funded through at least Q1 2018.

In October shares had been trading over $10 before starting the current slide. That slide was accelerated in early February when the FDA requested more information on Arantana’s drug Entyce. That news spurred a number of class action lawsuits against Aratana Therapeutics Inc. (NYSEMKT:PETX) that are alleging Arantana made materially false or misleading statements with regards to Enctye’s future prospects. What is known is that the FDA’s request pushed back Entyce revenues by more than a year.

Aratana Therapeutics Inc. (NYSEMKT:PETX) utilizes a unique business model. The company uses existing human therapeutics research and development to create new therapeutics for animals. By using existing human pharmaceuticals, Arantana believes it will bring medical treatments for pets to market in a much more efficient fashion. Accordingly, Aratana Therapeutics Inc. (NYSEMKT:PETX) has a strong pipeline:

This robust pipeline could be one reason that Aratana Therapeutics Inc. (NYSEMKT:PETX) may have a bright future – once they start monetizing it.

Ticker Symbol PETX
Last Price a/o 4:00 PM EST  $                      5.32
Average Volume                    475,000
Market Cap (mlns)  $                  195.94
Sales (mlns) $38.30
Shares Outstanding (mlns) 36.83
Share Float (mlns) 35.32
Shortable Yes
Optionable Yes
Inside Ownership 2.60%
Short Float 9.67%
Short Interest Ratio 7.19
Quarterly Return -32.66%
YTD Return -25.91%
Year Return 15.65%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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