What: Aratana Therapeutics (NASDAQ:PETX), a clinical-stage pet therapeutics company, saw its stock rise by over 22% in July. This rally was initially triggered by the positive top-line data readout for Aratana's experimental appetite stimulant, capromorelin (AT-002) in late June, where the drug 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 the naturally occurring hormone, ghrelin, which stimulates appetite.
Adding fuel to the fire, the company announced another late-stage success with AT-003, an extended-release bupivacaine liposome injectable suspension licensed from Pacira Pharmaceuticals designed to treat post-surgical pain in dogs.
So what: Aratana plans on filing regulatory applications for both experimental drugs by 2016, potentially transforming the small-cap developmental-stage company into a commercial operation.
Now what: Management believes that it could have up to six new products on the market by 2016, making it a leader in the field of pet therapeutics. Even so, the market appears somewhat skeptical about Aratana's ability either to achieve this lofty goal or to successfully commercialize its late-stage assets. After all, its market cap sits at a mere $602 million, despite its earnings per share projected to grow by a healthy 15%, on average, for the next five years.
Given that Wall Street had a similarly pessimistic outlook for Aratana's clinical pipeline before these late-stage successes, I'm cautiously optimistic this small-cap biopharma could continue to grow by leaps and bounds, making it a stock to watch heading into 2016.
George Budwell and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.