Aratana Therapeutics, Inc. (PETX) received encouraging news as its canine-specific monoclonal antibody, AT-005, gained conditional approval from the United States Department of Agriculture (:USDA), to aid the treatment of T-cell lymphoma in dogs. Aratana shares rose on the news.

We note that conditionally approved products have a reasonable expectation of efficacy. The conditional license for AT-005 will expire 2 years from the date of issue.

We remind investors that Aratana acquired Vet Therapeutics in Oct 2013. With the acquisition of Vet Therapeutics, two canine monoclonal antibodies entered Aratana’s pipeline – AT-004 (to aid the treatment of B-cell lymphoma in dogs) and AT-005 (to aid the treatment of T-cell lymphoma in dogs).

AT-004 gained conditional approval license from the USDA in Nov 2012 and is expected to receive a full license in the next 12-18 months. AT-004 is licensed to Novartis’ (NVS) arm, Novartis Animal Health Inc., for commercialization in U.S. and Canada.

Aratana is running additional studies to support the safety and efficacy of AT-005. For AT-005 the full product license is expected in 2015.

AT-005 will be Aratana’s first internal opportunity to commercialize a canine lymphoma monoclonal antibody. Gaining conditional approval is a major milestone for Aratana as it is expected to finally commercialize its very first product this year.

Aratana, a biopharmaceutical company, has in-licensed three compounds, namely, AT-001 (pain in dogs and cats), AT-002 (inappetence in dogs and cats) and AT-003 (post-surgical pain in dogs and cats) since 2010.

We are encouraged by the company’s progress with its pipeline so far. We expect investor focus to remain on Aratana’s pipeline going forward.

Aratana carries a Zacks Rank #4 (Sell). Some better-ranked players in the pharma industry include Actelion Ltd. (ALIOF) and Forest Laboratories Inc. (FRX). Both the stocks carry a Zacks Rank #1 (Strong Buy).

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