Jefferies Restarts Aratana Therapeutics (PETX) at Buy; Sees Entyce, Nocita Launches as Key Growth Drivers
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Jefferies resumes coverage on Aatana Therapeutics (Nasdaq: PETX) with a Buy rating and lifts its price target from $12 to $13 today.
Analyst David Gu commented,
PETX should drive significant upside to its valuation by executing on its upcoming US commercial launches of Entyce and Nocita, and continuing to advance its robust pipeline from a solid cash position. The underappreciated Q3'16 readout for AT-018 pilot study shows favourable risk-reward, and the off-the-radar ViroVet stake represents upside potential.
We expect PETX to enter into a period of rapid sales growth driven by the upcoming launches of Galliprant (led by partner Elanco), Entyce, and Nocita in the US, with revenue increasing to $115m in 2020E from $21m in 2017E. We estimate that PETX will reach sustainable operating profitability in 2019E and has sufficient cash on hand to get there.
We are raising our Price Target on higher peak derisked sales for AT-018 of $205m (from $90m) and recent business updates (e.g., regaining AT-006 rights, Nocita approval). Further, PETX's 28% equity stake in start-up ViroVet is off-the-radar. Our DCF based valuation points to a Price Target of $13/share, with Galliprant/Entyce/Nocita/AT-018 worth c$2.00/c$2.50/c$2.00/c$2.00 of our DCF, respectively.
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