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Aratana, Eli Lilly Team Create 'Watershed Contract' For Pet Biotech Sector

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In Monday's after-hours session, shares of Aratana Therapeutics Inc PETX 4.29% were halted as a deal with Elanco Animal Health was announced. Elanco is a division of Eli Lilly and Co LLY 0.14% that focuses on animal health products such as Apralan, Coban, Hygromix, Maxiban and Micotil. Now, you can add Aratana's Galliprant, a tablet that controls pain and inflammation associated with osteoarthritis in dogs.

Under terms of the deal, Elanco will have global exclusive rights to develop, market and commercialize Galliprant while they help co-promote Galliprant in the U.S. with Aratana. For these rights, Aratana will receive an upfront payment of $45 million, with $83 million available in achievement of various milestones.

Aratana Therapeutics CEO Dr. Steven St. Peter said, "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."

At a market cap of $259 million, the $45 million deal equates to roughly ~17 percent the size of Aratana. Shares resumed at 4:35 p.m. ET and immediately spiked a high of $8.78. At the time of publication, shares were up 13 percent to $7.81.

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