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Aratana Therapeutics, Inc. (NASDAQ:PETX)

Q2 2013 Results Earnings Call

August 13, 2013 8:00 AM ET

Executives

Dr. Steven St. Peter - President and CEO

Louise Mawhinney - Chief Financial Officer

Analysts

Steve Crowley - Craig-Hallum

Jon Block - Stifel

Josh Schimmer - Lazard Capital Markets

Tim Lugo - William Blair

Jose Haresco - JMP Securities

Operator

Good morning. And welcome to the Aratana Therapeutics Second Quarter 2013 Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Dr. Steven St. Peter, CEO. Please go ahead.

Dr. Steven St. Peter

Thank you. Good morning. This is Steven St. Peter, President and CEO of Aratana Therapeutics. I’m here with Louise Mawhinney, our Chief Financial Officer.

Welcome to the second quarter 2013 earnings call. Our first earnings call as a public company. This call is significant milestone, I mean, years of hard work behind and before us, and on behalf of the entire Aratana team let me begin by thanking each of you for your interest in this unique and exciting company.

Before we begin, I’d like to let you know that we will be making some forward-looking statements today. These statements involve uncertainties and risks, and therefore, should not be relied upon as predictions of future events.

Actual events and circumstances which maybe beyond our control may differ from today’s forward looking statements, including but not limited to as a result of the risks, uncertainties and other important factors set forth in our filings with the SEC.

For those of you who are new to Aratana story, let me briefly restate our business strategy. So, Aratana is focused on the licensing, development and commercialization of innovative medications for pets -- for pet therapeutics. Our strategy is to in-license proprietary compounds from human biopharmaceutical companies and to develop these product candidates in a capital and time-efficient manner.

We believe that this pet therapeutics will permit veterinarians to manage pet’s medical need safely and effectively resulting in longer and improve quality of life for pets and strengthening the human pet bond.

Over the next 20 minutes, we will provide an update on our product development efforts, followed by a business development update and conclude with the financial results for the quarter and financial guidance. We are pleased to take questions following the prepared comments.

With respect to product development, product development continues to be on track with what we discuss at the time of our initial public offering. The anticipated first launch date for each of our products, AT-001, AT-002 and AT-003 continues to be 2016.

In a moment, I will give some topline product by product updates, but I also want to announce that Aratana will be hosting an Investor Day to comprehensively layout the pet therapeutics regulatory framework and provide additional product develop -- product updates. That event is called our Pet Therapeutics Primer and Product Update and it will be on September 11th from 6 to 7:30 Eastern in Boston. We will be able to accommodate a few dozen investors in person but the event will also be webcast live and then available on our website afterwards.

Here is what we will cover? First, a regulatory framework at the FDA Center for Veterinary Medicine or CVM will be explained by Dr. Linda Rhodes, Aratana’s Chief Scientific Officer. Dr. Rhodes will discuss the three concurrent regulatory works stream for pet therapeutics approval namely safety, efficacy and manufacturing. She will also discuss the mechanics of filing an administrative New Animal Drug Application or NADA, and a subsequent notification of approval.

Although, the focus will be on the U.S. regulatory process, Dr. Marie-Paul Lachaud, Aratana’s Head of Drug Development in Europe will also participate. Our Vice President of Chemistry, Manufacturing and Controls, Tammy Newbold; and our Vice President of Manufacturing, Don Stitzenberg will also be available.

We will then move to a product by product update by Dr. Ernst Heinen, Aratana’s Head of Drug Development and Evaluation. We will have time for Q&A after each session and more information about this event is available on our website.

So now let me transition and provide the product development updates. First, AT-001, our EP4 antagonist for the treatment of pain. With respect to dogs, we are pleased to announce that earlier this month we completed enrollment in our dose-ranging field study. We had over 400 dogs screened.

We expect the result before Thanksgiving and we will send out press release of the topline results when they are available. We will discuss these results with the CVM to reach concurrence with them on the next steps for the pivotal efficacy submissions, including additional trials if needed.

With respect to our work with AT-001 in cats, we anticipate initiating additional proof-of-concept study this month to further explore the therapeutic window. As we previously disclosed in the S-1, we saw good efficacy signal but have some unwanted liver function effects. We will explore three doses in these new cats study and obviously, we are looking for an effective dose with the widest safety margin. We anticipate the results of the cat proof-of-concept study before Thanksgiving.

Next, I will discuss AT-002, our ghrelin agonist for inappetence. With respect to our dog program, we are continuing our discussions with the CVM to gain concurrence on the pivotal trial design for efficacy. This is obvious we are taking somewhat longer than we had anticipated during our road show, but we are focused on achieving the optimal outcome. We are also waiting to formulate clinical trial material from our contract manufacturer. We anticipate commencing the pilot trial in late 2013 or shortly thereafter.

With respect to our cat program, we are continuing to conduct pilot field studies to establish proof-of-concept and pivotal design, and we expect results in the first half of 2014.

In our initial pilot study, the owner assessment instrument did not work as it had in dogs. Cats seem to fight themselves on masking their behavior, well, dogs are somewhat easier to assess. Hence we would like to extend the treatment period and measure weight gain.

In laboratory cats we did see weight gain and increase food intake. So the task now is to replicate that effect in client-own cats with inappetence. We remain enthusiastic about the innovation that this product will represent in both cats and dogs.

And finally, I will discuss AT-003, our liposome bupivacaine injection for post-operative pain. With respect to our dog program, because we acquired the significant dog safety from Pacira our licensor, we have been able to initiate a dose-ranging study in laboratory dogs. We anticipate initiating discussions with the CVM on the development product.

And with respect to cats since we did not acquired cat safety data, we have completed a pilot safety study in laboratory cats. We are pleased with these results and we anticipate initiating a dose-ranging study in laboratory cats in late 2013.

So concludes the product development update, a portfolio of three molecules for six products in dogs and cats, and 12 anticipated approvals in U.S. and Europe. And in addition to these programs, if you previously discussed, we are now pleased to discuss our expanding business -- our extending pipeline.

So let me now transition into a business development update, I will begin by restating that our goal is to leverage our unique combination of animal and human health expertise connections, and our innovative biotech mindset to be a partner-of-choice in pet therapeutics.

As such, we have recently complemented our traditional in-licensing and product acquisition strategy with what we refer to as our Option Program. Our Option Program allows us to more effectively pursue our objective of capital and time-efficient de-risk drug development by giving the proof-of-concept very early in the development cycle.

We achieved this by targeting certain key attributes, one, safety data in at least one target species, two, human or mammalian efficacy data, and three, appropriately scale manufacturing.

Our business development team strives to identify these product opportunities, secure the rights to explore the product concepts with additional early de-risking studies and negotiate a pre-agreed set of licensing terms that comes into force if and when Aratana decides to opt in.

We are pleased to announce that we have executed three option agreements and we are activity moving those product candidates towards the decision point. When we have made a decision to opt in, generally within approximately nine months, we will publicly announce such a decision, identify the product opportunity and layout the development timelines.

For now let me just say that each of the three option agreements comes from human health, one molecule is in Phase 3, one molecule is in Phase 2 and the final molecule has completed Phase 1.

For each product candidate, we already have dog safety data and in two of the three molecules, we have preliminary dog efficacy data. So, again, de-risking is a function of appropriate in-licensing criteria, as well as early development work.

In general, the financial terms of these option agreements can be summarized as follows, approximately $250,000 to $350,000 in option fees per program, which we have already paid, approximately $1 million per program in upfront licensing fees if and when Aratana ops in, approximately $5 million per program in aggregate milestone payments through approval in the U.S. and Europe in single-digit royalties.

Obviously, if each of the option agreements is exercised, Aratana’s pipeline of products in full development will have significantly expanded, but the aggregate amount of capital at risk in getting to that decision is approximately $1 million for all three programs.

We currently expect that for each of the two to three Option agreements, approximately one to two molecules will move into full development. It’s in pet therapeutics to the extend we suffer program attrition we aimed to have it occur early and not later in the pivotal field trials.

Furthermore, let me reiterate that our Option Program has not a substitute for a strong interest in in-licensing deals where appropriate, including commercial stage products. Our stated objective is at least one new NADA per year and all of these business development efforts support that objective.

In a moment our CFO, Louise Mawhinney, will discuss the financials, but I want to make it clear that we have anticipated such deals in sizing our IPO and constructing our long-range plan. In fact, we continue to look to further extend our portfolio and we expect to have the human and financial capital to do so.

We hope that all biopharmaceutical companies asked themselves what is our animal health strategy? And seek out Aratana is the partner-of-choice in answering that question.

And with that, I would like to ask Louise to update you on the financials after which we will take questions.

Louise Mawhinney

Thank you, Steven. Hello everyone. For the quarter ended June 30, 2013, the company reported a net loss of $4.2 million, or $4.62 per share, compared with a net loss of [$1.3 million], or $10.21 per share for the quarter ended June 30, 2012. For the six months ended June 30, 2013, the company reported a net loss of $8.3 million, or $9.35 per share, compared with a net loss of $5.8 million, or $19.15 per share for the six months ended June 30, 2012.

The net loss for the quarter ended June 30, 2013 and the six months ended June 30, 2013 included $800,000 and $1.6 million of unaccreted dividends on convertible preferred stock, which were paid out of in-stock in July 2013.

As of June 30, 2013, the company had a total of approximately $20.2 million in cash, equivalents and marketable securities. Already deducted from the $20.2 million was a prepayment of $2.7 million of expenses related to the company's initial public offering. In July, the company completed the IPO which together with the exercise of the underwriters' overallotment, provided net proceeds of $34.2 million. The company's total cash and equivalents immediately post-IPO was approximately $57.1 million.

The company had no revenue for the quarter and six months ended June 30, 2013, and no revenue for the quarter and six months ended June 30, 2012.

Research and development expenses totaled $2.5 million for the three months ended June 30, 2013 and $4.6 million for the six months ended June 30, 2013. This compares to $1.9 million for the three months ended June 30, 2012 and $3.7 million for the six months ended June 30, 2012.

The increase in research and development expenses for the three and six month periods of 2013 compared to the comparable periods in 2012 is due primarily to increased personnel in drug development, CMC and manufacturing and continuing development activity for both our AT-001 and 002 programs. And in addition, we began development of AT-003 and entered into an Option agreement to in-license additional compounds.

General and administrative expenses totaled $1.3 million for the three months ended June 30, 2013 and $2.5 million for the six months ended June 30, 2013. This compares to $0.6 million for the three months ended June 30, 2012, and $1.1 million for the six months ended June 30, 2012. The increases are primarily associated with additions to our senior management team, our expansion into office space in Boston, increased business development activities, one-time IPO costs and the increased costs associated with requirement of a public company.

And now, I’d like to transition and give financial guidance for the rest of 2013. The company expects to end the year with between $45 million and $50 million in cash and equivalents, which we expect to be sufficient to fund operations to at least the end of 2015.

We expect to use our cash with, I’m sorry -- we expect our use of cash for the third and fourth quarter of 2013 to be less than $10 million. We believe that we have the resources to fund our current programs to approval and advance up to one additional program per year generated by our business development activities as well as pre-launch commercial activities needed for the 2016’s product launch.

With that, I will hand our call back over to Steven, who will open it up for Q&A.

Dr. Steven St. Peter

So thanks Louise. Just before we go into the Q&A, just one update, when I was discussing the AT-002 program in dogs, I meant to state that we anticipate commencing the pivotal trial in late 2013 or shortly thereafter. I think I may have said pilot trial but with that we meant pivotal trial.

So with that, we are pleased to take questions.

Question-and-Answer Session

Operator

(Operator Instructions)

Dr. Steven St. Peter

Great. So do we have our first question?

Operator

Yeah. The first question comes from Steve Crowley of Craig-Hallum. Please go ahead.

Steve Crowley - Craig-Hallum

Good morning folks and congratulations for the recent progress on multiple fronts.

Dr. Steven St. Peter

Thanks, Steve.

Steve Crowley - Craig-Hallum

In terms of the option program, you were very clear in delineating this opportunity set as being incremental for you relative to your traditional in-licensing and product acquisition activity. What can you tell us about that process to traditional process and the pipeline for those activities?

Dr. Steven St. Peter

Right. So thanks for the question. So we do recognize that there is kind of insatiable appetite for detail on the part of industry community and the analysts with the respect to our pipeline. But we also face a competitive environment, so we’re trying to balance those two things basically.

With respect to the option program, really Steve, we do have dog efficacy data and some dog -- and also a little bit of dog toxicity data in these programs, at least on efficacy in, sort of, two out of three. So in a way, they are much further along than, for instance, some of the -- frankly licensing deals we’ve done in the past. But as we matured as a company and got out there to the extent we can do these types of option deals where for a small fee upfront than we can spend the money to really understand if a full license make sense, sort of, that’s what we’re doing.

So I think driven partly by the opportunity to those types of deals versus traditional in-licensing, on the other hand, typically, if it were an animal health company. And they have move things along and they’ve generated a type of data package that you would anticipate, we would probably opt for a regular licensing deal. But we’re dealing with the human biopharmaceutical communities who may not have done a lot of those activities leading up to a license. We can kind of overcome some of those gaps by providing some upfront money and predefined terms and then working to complete the package so that when we do the in-licensing deals, it’s both a good opportunity for us and the partner.

The pipeline is robust. I will say that what we’ve looked at log scale larger number of opportunities in terms of Option programs in what the three that we’ve actually done. And we continue to have lots of opportunities on traditional in-licensing as well. So I think fortunately becoming a public company has really increased our ability to become a partner, have a visibility and we’ve been approached by companies and we love that fact.

Steve Crowley - Craig-Hallum

Fantastic. One follow-up question, as it relates to the commercial organization and starting to put the scaffolding together to be effective in the commercial market with a portfolio of products. What can you tell us about what you’ve been able to accomplish there or post the IPO the plans that you’ve started to put in place?

Dr. Steven St. Peter

Yeah. So Julia Stephanus, our Chief Commercial Officer contends to really -- continues to look at the products, the product opportunities, the market forecast, some of the branding around the products. We have an ongoing search for a marketing manager now and that will be the headcount that we add basically in the near term.

But really it comes down to -- since we’re more than two years from launching on the products, at least having details forecast, doing some market research, discussing those opportunities and then ultimately in 2014, beginning some of the partnering discussions outside of the U.S. which I think will also give us some feedback on the product.

So, it’s being two plus years in term of actual commercialization of our current portfolio but the work is really more around making sure that we’re developing the product in the way that is going to be the most commercial friendly and lots of input between commercial on our development team.

Steve Crowley - Craig-Hallum

And in terms of your present upcoming CVC, you have a little more money to work with although I know you’re trying to be prudent with that money. What can you tell us about your presence this year versus prior years? Thanks for taking my questions.

Dr. Steven St. Peter

Thanks Steve. So in our press release, we mentioned the number of upcoming events in the Kansas City Area which we refer to as the Animal Health Corridor, including one of the three big conferences in veterinary medicines, the Central Veterinary Conference. So, we will be attending that conference presenting certain sessions.

There is also concurrent with that the Animal Health Research Symposium, our Chief -- our head of drug development evaluation will be presenting at that conference. There is also an Animal Health Investor Forum where Aratana will be sponsoring the innovation award and participating broadly. There are roughly 10 companies that will be there. We’re meeting with several of them one-on-one. And we’re also hosting an Open House in Kansas City, a barbecue and some of you may got an invitation for that.

But really it’s really Animal Health Industry as well as our collaborators and partners and investors. And we’ve done all of those activities in the past but I think this year it’s safe to say we’re stepping it up a little bit and it’s been a remarkable year for Aratana. And we are very proud of that. And I would say, we have substantially more cash now than we did at last year’s event and certainly the industry has taken note of that.

Operator

Our next question comes from Jon Block of Stifel. Please go ahead.

Jon Block - Stifel

Great. Thanks. Good morning, guys. Maybe the first question for you, Steven, the cash balance you mentioned last into beginning of 2015, I just want to follow up that is there some that all the three compounds in the Option program or exercise, one, two, three if you can give us some details here?

Dr. Steven St. Peter

In terms of the financials spent to move those programs up and put them in development, Jonathan.

Jon Block - Stifel

Exactly. I mean, that cash lasting you fit through the end of ‘15 actually enough a little bit, for example, we had in our models so that’s good to see. But I’m also wondering if that assumes, that is taking those three compounds, exercising all three and moving the import as well?

Dr. Steven St. Peter

Yeah. So, I think the baseline will be to assume that we opt in on one or two of the three. The reason -- part of the reason we do the options, we’re trying to remain topline to about what we’re bring in. And we don’t want have announce the deal and put a bunch of money into it and be forced to see dilemma of you kill it earlier, since you’ve already announced it, you have to keep funding it. So we’re going to stay very disciplined on that. So we would expect to move forward kind of one or two per year which really is in the base plan, Jon.

Our IPO because we took the price down to six, we didn’t increase the number of shares but we raised approximately $10 million less than what we had originally filed within May. But I think the point is that’s the money that would have be on the balance sheet in 2016 assuming for development of our three molecules plus one new program per year.

And maybe the way that I think about that if you go back and look at our financials at what we spend in 2010, ‘11 and ‘12 on our first three programs, it was actually a fairly modest amount of money in that first 24 months because the reality as of the $10 million program you spend, the majority of that comes when you are doing your commercial manufacturing for your -- your final pivotal trial and then running the pivotal trial.

So two years of full speed of head development on these programs are not as capital intensive as what people might think. And so that really give us the ability even if we put them in full development and work as hard and as fast as we can on them, we get well into 2015.

Jon Block - Stifel

Okay. Got it. And then maybe just another question on the Option program, I mean, it seem to be impressive because three like you said come with safety. I believe you mentioned two out of three come with some level of efficacy. So can you speak to similarly what you guys hope to do in that trial period. And I believe you referenced in and around nine months, why you have the optionality? I mean, is it just getting the compounds in your hand and maybe running a small pilot to make you feel better before I switch off?

Dr. Steven St. Peter

Yeah. So I won’t give specific details on the programs with a couple of activities. Certainly, running pilot programs, right, really trying to go and see what kind of efficacy signal exist and we can do that as we’ve discussed efficiently, given that there is laboratory cats and dogs, you can test the molecules on that allows us through that efficiently.

So, that’s certainly one work stream. The other work stream relates to manufacturing and so in a lot of cases, we are actually ahead or we need to move faster than the human company in terms of manufacturing and that I think as you know with AT-001 and AT-002 is actually the rate limiting step in our approvals as manufacturing.

So to the extend we can spend time and in some cases our money to solve critical manufacturing questions and better scope out the timelines and the cost involved we love to use the option period to do that.

Jon Block - Stifel

Okay. Great. Then just maybe last one or two questions on the pivotal for AT-002. I mean, anything that you can talk to on this -- the slight push out there, is it the size of the trial, is it the outcome that the CVM is focused on?

Dr. Steven St. Peter

Yeah. So, Jon, I wouldn’t get to anxious about those statements. I mean, we will give further update in September on that. It just we don’t -- we’ve not finalized concurrence with the FDA. So that’s the communication. We frankly thought it would happen by now, it hasn’t, but we are working to resolve that and we maybe able to start that trial yet in 2013. So it wasn’t meant to really scare people. It just to meant be direct in the communication about where we are with it.

Jon Block - Stifel

Understood. And the very last one, I promised, and then on the cats, you said, you are looking to I believe lengthening the duration of trials that maybe you can go ahead and figure out from a weight perspective what you’re seeing that’s a general statistical significance?

Dr. Steven St. Peter

Yeah. So, thanks for asking that question. So, I think, certainly, cat owners and certainly the people of this company understand the cats and dogs are different. And so when we had agreement with the FDA on the original study in the dogs, we like the appetite score on the shorter duration that’s helped pretty great to us and tell like the right thing to do, so we did that.

Knowing that in cats, it just, it’s harder to actually assess appetite, but I think being curious we’re going to use that instrument to run that and see where it was and run the same duration. But the data guide you cats, dogs are not small humans and cats are not small dogs. And so we’re now just moving on and extending the duration. We’ve not said how long we are going to extend it and really try to show weight gain.

And the good news is in laboratory cats our partner at the time actually Pfizer was able to show weight gain and increase appetite in laboratory cats. So we are now headed towards those things, certainly the weight gain.

And but we’ll give a better update on that program in September. But I think as we’ve signaled maybe in the S-1 this, this is not totally anticipated and we are thrilled to have got it in dogs, frankly, and we are just working through the cat profile now.

Jon Block - Stifel

Perfect guys. Thanks for your time.

Dr. Steven St. Peter

Thanks.

Operator

Our next question is from Josh Schimmer of Lazard Capital Markets. Please go ahead.

Josh Schimmer - Lazard Capital Markets

Hey. Thanks for taking the question. Just follow-up on the question about cats and dogs, and how AT-002, I guess not having either of those animals at home. Can you just help describe the behavior different that one does see in the cats versus dogs when they’re hungry and were those differences and that masking of behavior evident in the lab studies as well?

Dr. Steven St. Peter

Yeah. So, I mean, these will not be comments from the trial, they’ll just be sort of generalizations, Josh, on that and by the way thanks for being on the call. So, cats tend if you haven’t been in a laboratory and you can control the setting you can sort of relatively easily measure what they eat. But a lot of cat owners are very finicky and their eating behavior and a lot of owners kind of chase them around with beef and if that doesn’t work then chicken and it’s sort of a mystery and cats also go out and find their own food independent of what you’re providing in the food bowl.

In fact, there was a pretty humorous New York Times article about the number of cats that actually have second families that go out and seek affection and food. So it’s just harder to really for the owner that directly observe what a cat is doing with respect to appetite.

Now dog is different, right? I mean, a dog will just jump, go wild. I mean they’re very different in terms of their willingness to seek treats and to really exhibit that sort of behavior. They typically eat their meal and that’s it, that’s they’re done till their next meal. They don’t sort of graze through the day like a cat tends to do.

So that’s why it’s just harder to really measure an appetite score when you’re asking an owner over a period of seven days, well, what’s your cat doing and a lot of them are like we have no idea and so I think those are some of the issues.

Josh Schimmer - Lazard Capital Markets

Okay. That’s helpful. And then for 001, once you complete your field study in dogs, what additional trials would you consider or what might be required to meet FDA criteria for filing, would there be another field study, if this one showed what you were looking for or are you expecting kind of a smaller follow-up trials if the FDA needed?

Dr. Steven St. Peter

Right. So it’s a good question. So the FDA -- the approval of pain products in dogs is well-established because there’s been several products that have been approved by the FDA and what you have to do is go into the field and have an owner assessment of pain. So that’s fairly well-established.

So in really doing our pilot study or dose-ranging study, we decided you have to obviously go into the field and use the instrument that you hope to use for an approval, because it’s been validated already. But the approach that we took is we screened over 400 cats and we’re studying three different doses plus a placebo and it’s powered such that if we see the effect that we hope to see and if it’s one of the lower doses, certainly that could be our pivotal study and I think we’ve talked a little bit about that.

On the other hand to extent depending on the results, we may need to do another smaller basically pivotal study after one does if we think it’s important, I’m sorry, I’m discussing dogs right now not cat…

Josh Schimmer - Lazard Capital Markets

Okay.

Dr. Steven St. Peter

Yeah. Answering for that, so we’ll be running that trial if we need to. The important thing to understand, the timeline to approval is limited by the CMC. So even if we needed to do additional clinical work, which frankly, we’re planning on doing, we’ve budgeted to do to nail it in terms of the pilot or the pivotal trial at the dose that we select, because that’s also data you can use for marketing, we would be able to do that relatively quickly and not after overall timeline or budget.

Josh Schimmer - Lazard Capital Markets

And then on the AT-001 cat program, I guess, considering that you’ve seen this masking behavior for AT-002, would you expect to have that similar question with the AT-001 pain studies and if so, how do you kind of work around that to identify a measurable robust signal?

Dr. Steven St. Peter

Right. So unlike dogs, where dogs, as I mentioned, there are several approved products for dogs, cats nothing really has been safe enough to go into chronic use and so there is no validated instrument for cats in terms of a chronic approval.

And so, we’re working to develop that now with some key opinion leaders and we think we’ll have an instrument that will work for cats, I would say also cats are so ached, they don’t like to exhibit pain, so you have to really educate the owners like, if the cat is hanging out under the bed all day it could be because they’re in pain and so there is questions you can ask the owners maybe to help you get there. But our first study that’s why we actually chose the cats that were getting declaws part of what was normally going to happen to them, we’re able to study in a declaw model if there is a pain effect which we did actually see with the drug in our first proof-of-concept study.

So, in the acute setting, it’s going to be easier and that’s and it’s -- that’s actually been validated and there are products approved in acute setting. So that’s the first thing we’re doing as acute. But how we get the chronic, assuming we’re fortunate enough to be able to do that which we hope to be the case. It is going to be harder to develop the instrument. I mean cats are more difficult to assess than dogs on in many disease areas.

Josh Schimmer - Lazard Capital Markets

Do you feel, as well you need chronic efficacy data or if you had acute efficacy data and chronic safety data, would that be enough for commercial success?

Dr. Steven St. Peter

Well, I think that our goal really is to run the trial for the drug to be use and the indication where it intended to be used. I mean veterinarians as you know will use things off label and in fact, they’ll use human and majority if not 90% plus products they use are human products have not been studied nor shown to be safe nor effective in dogs or cats. So veterinarians will do what they want to do, but really our intent is when we think there is a value proposition for a pet, we will do that study and include that in the label.

Josh Schimmer - Lazard Capital Markets

Got it. Okay. Thank you.

Dr. Steven St. Peter

Thanks Josh.

Operator

Our next question comes from Tim Lugo of William Blair. Please go ahead.

Tim Lugo - William Blair

Hey. Thanks for taking my question and congratulations for all the progress in your first quarter as a public company.

Dr. Steven St. Peter

Thanks Time.

Tim Lugo - William Blair

I guess regarding the new programs, the fact that one program is in Phase 1 in human, one is in Phase 2, one is in Phase 3, does that mean they will be on significantly different timeframe or you bring them along the vet market, I assume not, but I just want to verify that?

Dr. Steven St. Peter

Actually you’re exactly right there, I don’t -- I’ve not looked at the actual projected timelines for each of them. But in general Phase 1 does not necessarily take us longer than something that’s in Phase 3, really depends on how far long the manufacturing is, that is going to be for us the critical issue in just about every program we take from the human side, it’s going to be scaling up the manufacturing to be able to run the pivotal field trial. And so generally that’s not the issue between Phase 1 and however, if there is difference between Phase 1 and Phase 3 it’s more manufacturing issue.

Tim Lugo - William Blair

Okay. That makes sense. And will any of these programs do they have a potential to be brought to market in cats and when do you make that decision? Is that within the nine months timeframe as well?

Dr. Steven St. Peter

Yeah. So, let me give just a little bit more detail on that. So the way that we’re thinking about that is all of the products we think will, well, one of the three products, frankly, is more of a dog product than it is a cat product, simply because that medical need doesn’t exist as it does in cats, although, there are some cats. So basically we’re talking about two of the programs being dog and cat, and one of the programs being more clearly a dog program based on kind of the medical need.

And we will in terms of how much cat work we do in the option period, we’ll provide an update maybe on that at the September meeting and generally, we love to do some cat work during the Option period so that we can de-risk in both species.

One of the challenges if you don’t start with cat data, the first thing you have to do is do the cat safety data, and so it’s not clear, you can initiate that. So we just need to figure out what we can do cat versus dog, but most of our work is going to be in the dog species initially for these programs.

Tim Lugo - William Blair

Okay. That sounds good. And can I get a status update on how discussions are with potential European partners for the existing, I guess, first three molecules?

Dr. Steven St. Peter

Well, so on that, I mean, we are again, obviously, one of our data from the AT-001 trial in dogs. And we want to have initiated our AT-002 trial and be a little bit further along with AT-003. So while we had interactions with most of our general animal health companies and in fact in Kansas City, a lot of them will be there and we’ll continue to interact with them.

In terms of the real sit down and talk about the products, I think that’s more of a 2014 type development just so that we get it further along. I think it is just a much better conversation and more sub that we have to talk to them about and construct the deal, I think the better.

Tim Lugo - William Blair

All right. Thank you very well for taking my questions.

Operator

Our next question comes from the Jose Haresco of JMP Securities. Please go ahead.

Jose Haresco - JMP Securities

Hi, folks. Good morning

Dr. Steven St. Peter

Hi, Jose.

Jose Haresco - JMP Securities

You mentioned that you scaffold dosing study in AT-001 by thanksgiving but you were going to release it as a topline data. When can I expect a full data set for that program so that our study to be released?

Dr. Steven St. Peter

So, excellent. So this is one of the reasons, we are doing the Primer in September so people can really understand how it is different than the human health side. So typically once we see the topline data, we will go talk to the Center for Veterinary Medicine about the data which cases to include, which to exclude. You go through an exercise collaboratively with them and then you run the analysis and then you have your statistics and then you have -- you know, kind of where you are going. So we need to go -- we need to go do that.

And we can’t predict Jose, how quickly that discussion happens but in general I would -- we will give a more specific timeline limits, it’s not -- it’s obviously reasonably quickly after you have your data. Again, it depends how, what the data looks like. I mean, we also strive to have the clear data, thumbs up, thumbs down, but a lot of time we are dealing with things that we didn’t quite anticipate.

So we will go have those interactions and report back, but we’ve decided that we thought that we at least wanted to telegraph our people the top-line results. And then when we have the actual results we would come and have a more foursome discussion with our investors at that point.

Jose Haresco - JMP Securities

Okay. Thank you. Regarding your Option programs, can we recognize whether you want the cat out of the bag, no pun intended, with respect to the -- what exactly the mechanisms are in targets and so forth. Can you at least give a sense of, if you were to option these programs and when those products might be approve to get in the market, it step towards the very end of the decade or is it right after the first two product launches, and so it’s just kind of handicap on those launches might be?

And then, I guess, generally speaking you think about the scale of the market opportunity for programs that you option, is there a difference between how much those might be worth versus something you decide to end license right away. And then would they be in similar scales of what you have in the pipeline now?

Dr. Steven St. Peter

Right. Well, so let me just again talk about the demonstrating an Option program and an in-licensing program, and frankly any time, we’re given the opportunity to an Option program where we pay a more modest fee and have a period of time to work with the molecules and in-license it, we would prefer to do that pretty much every time even if that just as I think a fundamentally more attractive.

If you look at the terms of these products versus the products the AT-001 and 002, we like these terms a lot better. So maybe I wouldn’t mix them up too much in terms of how are they that different, but we will do a traditional in-licensing deal when we are forced to or frankly if we already made the decision that is ready to go into full development, we’re just going to do the license because no simply playing games, but if there is critical experiments and work that we can do in -- you have to have credibility with the partner and they have to understand what you want to do and why.

But it’s still kind of that as we’ve talked about before, kind of, it’s a five-year development cycle, I mean. And all of these products are from a top 20 areas of interest. They are all small molecules. They call come from human health. They are all in development and in human health. I mean, we think that they are attractive. They are just earlier than the first programs that are, kind of, in full development.

And just, to be clear as to why we’ve not named the molecules and the therapeutic indications and kind of the business reasons for that, I mean, this is a competitive environment. And it’s becoming shockingly more competitive, even since our IPO. I think we’ve generated a lot of interest in the space.

And the larger animal health companies don’t disclose anything about their portfolio/ And so we exist in an environment where people have three to four years to go after our products and where we are looking and we just assume not telegraph that until we’ve really made a decision and we have to.

And then the more practical reason is there is an opportunity for us to generate new IP around formulation or use and that option period is a very attractive time for us to do that and to get that buttoned up before the world knows what we are working on. So, I mean, this isn’t just we’re trying to be coy here. It really is about business reasons that we want to have these Options programs so we can run the experiments and to be really critical about our decision to move it in the full development or not in some of the competitive issues around given in this format.

Jose Haresco - JMP Securities

Okay. Just last question from me is, your -- is it fair to say that you also have presentations at NAVC in December or is it -- is it to soon to think about what you will be doing around there?

Dr. Steven St. Peter

Yeah. Typically, the conference -- North American Veterinary Conference, I think, is that what you are referring, and as you know Jose, we were there last year, and -- always on my client ticket, I am certain that we as a company will be there I am not sure which of us will be there. But we will have an increasing presence at that conference western vet, later in the year and then always the central vet in Kansas City.

Jose Haresco - JMP Securities

Okay. Thank you.

Operator

(Operator Instructions) I am showing no further questions. To conclude their question-and-answer session, I would like to turn the conference back over to Dr. Steven Peter for any closing remarks.

Dr. Steven St. Peter

Thank you. So, again, we really appreciate everyone’s interest in this exciting company and your confidence in us and allowing us to get public. It really is helping us to get to the potential partners and bring in the best molecules and develop these innovations for these members of our family. So, again, thanks and we look forward to seeing some of you in September and the rest of you at our next quarterly update.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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