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Why Aratana Therapeutics, Inc. Stock Skyrocketed

By George Budwell – Jun 29, 2015 at 4:09PM

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Aratana Therapeutics' shares jumped by 24% in after-hours trading last Friday. Here's why.

What: Shares of the clinical-stage pet healthcare company Aratana Therapeutics (PETX) rose by over 24% in after-hours trading on Friday -- and sustained at over 10% throughout Monday -- after the company announced that its experiment appetite stimulant, capromorelin (AT-002), met its primary endpoint of increasing appetite in dogs in a pivotal late-stage trial, compared to placebo. Capromorelin is a small molecule that mimics ghrelin, a naturally occurring hormone that stimulates appetite, and was originally developed by Pfizer as a potential treatment for weight-related problems in aging adults. 

So what: This positive clinical trial result could mark the start of Aratana's transition into a commercial entity. Based on these promising data, Aratana's management is hoping to launch capromorelin as a treatment for dogs that refuse to eat by 2016. 

Now what: Aratana plans on filing for marketing approval for capromorelin with the Food and Drug Administration's Center for Veterinary Medicine in the near future. Unfortunately, we haven't heard much from either the company or analysts covering the stock in regards to any estimates for the drug's peak sales. That said, the bigger issue is that Aratana has an additional five products in pivotal trials at the moment, meaning that this small-cap company could see a huge jump in revenue and earnings in the not-so-distant future. Indeed, the Street is already expecting earnings to grow by 15%, on average, per year over the next five years. As such, Aratana is an intriguing small-cap growth stock worth keeping an eye on moving forward.  

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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