What: After reporting that post licensing marketing studies designed to show that its drugs combat canine lymphoma aren't panning out, pet medicine maker Aratana Therapeutics (NASDAQ:PETX) crashed 35% today.
So what: Aratana Therapeutics markets multiple monoclonal antibody drugs for use in the treatment of dogs diagnosed with lymphoma, and in order to boost sales, the company has been studying the efficacy of these drugs in order to prove their value; however, unfortunately, trial results for these drugs are falling short.
Specifically, study results for Aratana Therapeutics' AT-004 and AT-005 aren't demonstrating the desired efficacy, and as a result, Aratana Therapeutics plans to continue selling them, but it will shift its research budget away from them toward next-generation monoclonal antibody therapies that it believes may work better.
Now what: It's disappointing to learn that Aratana Therapeutics' efforts came up empty, especially because these trial results indicate that the market opportunity for AT-004 and AT-005 is likely to remain small.
Aratana Therapeutics is working on other medicines that it hopes could become strong sellers, including therapies for osteoarthritis pain in dogs, but there's no telling when it may be able to deliver good news on the cancer front.
Because sales aren't likely to move significantly higher from their current pace (revenue was just $230,000 last quarter) until new drugs hit the market, investors might not want to consider buying into this sell-off. A better approach might be to keep this company on a watch list and to check back in with its progress over the coming year to see if its other therapies succeed.