Why Aratana Therapeutics Stock Soared in July

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What: Aratana Therapeutics , a clinical-stage pet therapeutics company, saw its stock rise by over 22% in July. This rally was initially triggered by the positive top-line data readout for Aratana'sexperimental appetite stimulant,capromorelin (AT-002) in late June, where the drug met its primary endpoint of increasing appetite in dogs in a pivotal late-stage trial, compared to placebo. Capromorelin is a small molecule that mimics the naturally occurring hormone, ghrelin,which stimulates appetite.

Adding fuel to the fire, the company announced another late-stage success withAT-003, an extended-release bupivacaine liposome injectable suspension licensed from Pacira Pharmaceuticalsdesigned totreat post-surgical pain in dogs.

So what: Aratana plans on filing regulatory applications for both experimental drugs by 2016, potentially transforming the small-cap developmental-stage company into a commercial operation.

Now what: Management believes that it could have up to six new products on the market by 2016, making it a leader in the field of pet therapeutics. Even so, the market appears somewhat skeptical about Aratana's ability either to achieve this lofty goal or to successfully commercialize its late-stage assets. After all, its market cap sits at a mere $602 million, despite its earnings per share projected to grow by a healthy 15%, on average, for the next five years.

Given that Wall Street had a similarly pessimistic outlook for Aratana's clinical pipeline before these late-stage successes, I'm cautiously optimistic this small-cap biopharma could continue to grow by leaps and bounds, making it a stock to watch heading into 2016.

The article Why Aratana Therapeutics Stock Soared in July originally appeared on Fool.com.

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