Quote:”The Activist Spotlight
Aratana Therapeutics (PETX)
Business: develops and commercializes biopharmaceuticals for pets
Stock Market Value: $232 million ($5.07/share)
Investor’s Avg Cost: $5.00/share
What’s Happening:Engaged Capital has nominated three candidates for the board at the 2018 annual meeting.
Key Numbers:
$12 million: money raised by PETX last quarter by selling small lots of shares through brokers
$10 million:the amount of the $12 million raised by PETX that likely came from Engaged
5.2%: PETX common shares owned by Engaged
Behind the Scenes: Aratana is one of the few businesses in the pet-care industry that, as an independent entity, is successfully commercializing drugs. It has three early-stage drugs currently being marketed, with several more in the pipeline. While there is a lot of potential here, Aratana is not yet cash-flow positive, and only has about 12 months of cash left. That’s created a lot of concern among the shareholders.
Engaged has nominated one director with bankruptcy experience, one with industry experience, and one with operating experience. The directors will have two objectives: first, streamlining operations and holding management accountable to stretch the remaining cash as long as possible; and second, instilling a sense of urgency in management about exploring a sale of the company so they do not end up in a fire sale, running out of cash.
Aratana could be an attractive acquisition for a larger pharmaceutical company such as Eli Lilly, Zoetis, Bayer, Merck, or Sanofi, who can eliminate corporate overhead, easily absorb other expenses, and leverage its infrastructure to market the acquired drugs.
-- Kenneth Squire”
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