Investing.com -- Shares in Aratana Therapeutics surged more than 17% in after-hours trading after the Indiana-based animal drug manufacturer came to terms on a deal with Eli Lilly and Company's Elanco pet health unit on an animal health rights licensing agreement.
Under the agreement, Aratana Therapeutics (NASDAQ:PETX) grants Elanco with exclusive rights to develop, manufacture and market Galliprant tablets, which have received FDA approval for pain and inflammation control of dogs with osteoarthritis. The condition reportedly affects as much as 20% of the adult canine population, Aratana said, citing a 2010 study from the Journal of American Veterinary Medical Association. Osteoarthritis can appear in dogs when joint cartilage or the protective material that allows flexible movement in a joint, breaks down over time. The resulting inflammation in a pet's joints can create stiffness, preventing the animal from running, jumping or climbing.
"Aratana understands the value of relationships with the right collaborators," Aratana Therapeutics CEO Steven St. Peter said in a statement. "We believe that this collaboration with Elanco, a leading animal health company, is a watershed event for the emerging pet biotech sector and further validates our focus on the pet therapeutics opportunity."
As part of the deal, Aratana said it will receive an upfront payment of $45 million from Elanco (NYSE:LLY)'. The agreement also calls for Aratana to receive up to $83 million in total if certain development, regulatory and sales milestones are met.
"This deal expands Elanco's robust companion animal portfolio, which will now give our customers and their patients a spectrum of treatments for managing osteoarthritic pain," said Jeff Simmons, president of Elanco Animal Health. "At Elanco, we understand the powerful role healthy animals play in making life better. As pets become important parts of our families, the need to help them live longer, healthier, higher quality lives increases as well."
Shares in Aratana soared 1.19 or 17.22% to 8.10 in after-hours trading.