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Actionable news in PETX: Aratana Therapeutics, Inc.,

Entry into a Material Definitive

Collaboration, License, Development and Commercialization Agreement

On Apri

l 22,

2016, Aratana Therapeutics, Inc. (the

Company

) entered into a Collaboration, License, Development and Commercialization Agreement (the

Collaboration Agreement

)

with Eli Lilly and Company, acting on behalf of its Elanco Animal Health Division (

Elanco

) pursuant to whic

h the Company granted Elanco rights to develop, manufacture, market and commercialize the Companys products based on licensed grapiprant rights and technology (the

Product

), including GALLIPRANT

(grapiprant tablets), an FDA-approved therapeutic for the control of pain and inflammation associated with osteoarthritis in dogs.Pursuant to the Collaborat ion Agreement, Elanco will have exclusive rights globally outside the United States and co-exclusive rights with the Company in the United States during the term of the Collaboration Agreement.

Under the terms of the Collaboration Agreement, Elanco has agreed to pay the Company an upfront payment of $45.0 million.

Elanco has also agreed to pay the Company a $4.0 million milestone related to European approval of Galliprant and a $4.0 million milestone related to the manufacturing of Galliprant and up to $75 million upon the achievement of certain sales milestones.

The sales milestone payments are subject to a one-third reduction for each year the occurrence of the milestone is not achieved beyond December 31, 2021, with any non-occurrence beyond December 31, 2023 cancelling out the applicable milestone payment obligation entirely.

The Collaboration Agreement also provides that Elanco will pay the Company royalty payments on a percentage of net sales in the mid-single to low-double digits.In addition, the Company and Elanco have agreed to pay 25% and 75%, respectively, of all third-party development fees and expenses through December 31, 2018 in connection with preclinical and clinical trials necessary for any registration or regulatory approval of the Products (

Registration

), provided that the Companys contribution to such development fees and expenses is capped at a mutually agreed amount.The Company is responsible for all development activities required to obtain the first Registration for the Product for use in dogs in each of the European Union and the United States, and Elanco is responsible for all other development activities.

Commencing on the effective date of the Collaboration Agreement, the Company is responsible for the manufacture and supply of all of Elancos reasonable requirements of the Product.However, Elanco retains the ability to assume all or a portion of the manufacturing responsibility during the term of the Collaboration Agreement. The parties have agreed under the Collaboration Agreement to negotiate and enter into a supply agreement formalizing the terms of supply of active product ingredients and/or finished Product by the Company to Elanco.

The term of the collaboration will continue throughout the development and commercialization of the product candidates, on a Product-by-Product and country-by-country basis, until the latest of (i) the date on which no valid claim of certain issued or granted patents specified in the Collaboration Agreement in the respective country exists,(ii) the expiration of any regulatory exclusivity in such country covering such Product, and (iii) the tenth anniversary of the first commercial sale of such product in such country.

The Collaboration Agreement may be terminated by Elanco at any time upon 90 days written notice to the Company.The Collaboration Agreement may also be terminated by either party (i) for the other partys material breach, where such breach is not cured within the timeframe specified by the agreement, (ii) upon the bankruptcy, insolvency or dissolution of the other party, or (iii) for certain activities involving the challenge of certain patents licensed by the Company to Elanco.Upon Elancos voluntary termination or termination for Elancos breach, among other things, (a) all licenses and rights granted to Elanco will terminate and revert to the Company, and (b) Elanco has agreed to assign to the Company all registrations and trademarks obtained in connection with the Product.Upon termination for the Companys breach, among other things, Elanco may elect to retain its rights to the licenses granted by the Company under the Collaboration Agreement

subject to specified payment obligations.

Under the Collaboration Agreement, the Company is also responsible for defending against third party infringement claims against Elanco arising from certain uses of the Product, and for any damages incurred as a result of such claims.

Co-Promotion Agreement

On Apr

il 22, 201

6, in connection with the Collaboration Agreement, the Company entered into a Co-Promotion Agreement (the

Co-Promotion Agreement

) with Elanco to co-promote the Product in the United States.

Under the terms of the Co-Promotion Agreement, Elanco has agreed to pay the Company, as a fee for services performed and expenses incurred by the Company under the Co-Promotion Agreement, (i) 25% of the gross margin on sales of Product sold in the United States under the Collaboration Agreement prior to December 31, 2018 (unless extended by mutual agreement), and (ii) a mid-single digit percentage of net sales of the Product in the United States after December 31, 2018 through 2028 (unless extended by mutual agreement).

The co-promotion of Product in the United States will be supervised and managed by a commercial coordination subcommittee composed of representatives from the Company and Elanco.Among other things, the committee is responsible for determining the overall strategy for the marketing and promotion of Product in the United States.

The Co-Promotion Agreement expires on December 31, 2028 unless extended by mutual agreement.The Company may terminate the Co-Promotion Agreement at will upon 90 days written notice to Elanco, Elanco may terminate the Co-Promotion Agreement in the event Elanco substantially stops marketing the Product, and either party may terminate the Co-Promotion Agreement upon the other partys material breach, where such breach is not cured within the timeframe specified by the Co-Promotion Agreement.In addition, the Co-Promotion Agreement provides that it will automatically terminate if the Collaboration Agreement is terminated early.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARATANA THERAPEUTICS, INC.

Date: Apr

il 25, 20

16

By:

/s/ Steven St. Peter

Steven St. Peter, M.D.

President and Chief Executive Officer

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