Aratana's Drug Pipeline Suggests Revenue Growth Could Continue For Years

The analyst expects more than $200 million in peak sales potential from Galliprant, Nocita and Entyce.

Market Opportunities

Jackson said Galliprant, for the control of pain and inflammation associated with osteoarthritis in dogs, offers a market opportunity in excess of $100 million. Nocita, a liposomal bupivacaine product for post-op pain management, could achieve peak sales well over $75 million.

"Entyce, which we view as an underappreciated asset positioned to emerge as a breakthrough first-in-class therapy for appetite stimulation, could surprise with peak sales potential in excess of $100 million," Jackson wrote in a note.

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Jackson projects Aratana's current target market of $2 billion to increase to more than $5 billion over the next ten years. The analyst expects Aratana to achieve fully-taxed, adjusted EPS of $1.92, excluding milestone payments from Elanco, in 2021.

Catalysts For The Drugs

Meanwhile, the upcoming catalysts include the start of pivotal field effectiveness trials for cat formulations of Nocita and Entyce in late 2016, followed by conditional licensure for AT-014 in late 2016 or early 2017. Further, the EMA approval of Galliprant is anticipated in early-2017.

At time of writing, shares of Aratana rose 3.18 percent to $9.09. The price target of $15 represents a potential upside of 70 percent from Friday's close.

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