The pet drug manufacturer Aratana Therapeutics and some of its executives were recently named as defendants in a securities class action lawsuit. The suit alleges materially false or misleading public statements about the development of one of the company’s medications. To learn more about this case, visit Battea’s Aratana Therapeutics case summary.
Specifically, the suit alleges that the company did not have the capability to develop the dog appetite stimulant drug Entyce for a commercial scale as it originally planned, due to a lack of viable manufacturing contracts, and that the drug would likely not hit the market until late 2017. As a consequence, the company’s and its executives’ previous statements about the drug’s availability were allegedly false or misleading.
The suit was filed in the U.S. District Court for the Southern District of New York, and has a class period from March 16, 2015 to Feb. 3, 2017.
The canine appetite stimulant Entyce is at the center of a securities class action lawsuit.A look at the revelations
In early February, 2017, Aratana announced in a regulatory filing it would have to delay the commercial release of Entyce, which was approved by the U.S. Food and Drug Administration the year before, due to the need to transfer manufacturing to a new vendor. As a result of this change, the FDA’s Center for Veterinary Medicine asked for more information about the move.
The company reiterated its position that it would take some time to get the transfer approved and manufacturing scaled up before a late 2017 release in its full-year and fourth-quarter 2016 financial results. Both these announcements resulted in relatively sizable declines in the company’s stock price. In those announcements, the company reported a net loss of $23.3 million for the fourth quarter, and $33.6 million for the full year.
How the stock moved
The price of Aratana Therapeutics stock at the start of the class period – when it filed its 2014 10-K – was a little less than $19 per share, but it has declined sharply in the time since. The price per share reached a class-period high of $19.73 in September 2015, but quickly plummeted on disappointing news about a canine lymphoma drug, falling to just $10.67 one week later. That slide continued into early 2016, when the stock price reached a trough of $2.70 in February.
After that point, however, the price recovered, rising to a high of $10.39 per share in early October 2016, before slowly starting to slide once again. When it initially announced the delay for Entyce, shares of Aratana were trading at $8.03 but dropped to just $6.14 four days later. The stock price dropped further upon the disappointing fourth-quarter and full-year 2016 results, sliding from $6.35 per share to $5.32 in a single day.
Today, shares of Aratana are trading at just $5.23.
For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or info@battea.com.