Elanco agrees to buy pet-drug developer for $234 million

Greenfield-based Elanco Animal Health Inc. announced Friday that it is purchasing a Kansas-based startup developing treatments for dogs and cats in such areas as cancer and osteoarthritis for $234 million in stock.

Aratana Therapeutics launched in 2010 and has 83 employees. Last year, it had $35 million in licensing revenue and product sales while posting loss of $14.7 million. 

It currently has three products approved by the U.S. Food and Drug Administration—a canine osteoporosis treatment, an appetite-control medication for dogs, and an anesthetic that mitigates post-operative pain in pets.

“Aratana has been one of the most innovative startups in animal health, bringing breakthrough solutions to the market,” Elanco CEO Jeff Simmons said in a statement. 

“We look forward to putting greater energy behind these brands with our increased share of voice in the field while leveraging Aratana’s strong presence in the specialty market to capitalize on new opportunities for key existing Elanco companion animal therapy brands.”

Aratana went public in 2013 at $6 a share. The shares later lost steam and closed Thursday at $3.41. Elanco’s purchase values each share at $4.75, a 39 percent premium to Thursday’s close. 

Elanco said the purchase price would increase from $234 million to $245 million if the appetite-control treatment hits certain sales milestones.

Elanco, which was spun off by Eli Lilly and Co. in an initial public offering in September, has been aggressively pursuing growth opportunities in the companion-pets field.

The company also announced Friday that it has signed a development and commercialization agreement with Colorado-based VetDC for a drug that is the first FDA conditionally approved canine lymphoma treatment.

The worldwide market for pet cancer therapies is expected to grow at a compound annual rate of 7.9 percent over the next five years, according to Reports Intellect. The firm estimates the U.S. market will reach $290 million in 2023.

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