10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35952

_______________________

ARATANA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

_______________________

Delaware	38-3826477
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

11400 Tomahawk Creek Parkway

Suite 340

Leawood, KS 66211

(913) 353-1000

(Address of principal executive offices, zip code and telephone number, including area code)

_______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes:  ☒     No:  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes:  ☒     No:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes:  ☐     No:  ☒

As of October 30, 2017, there were 42,999,561 shares of common stock outstanding.

ARATANA THERAPEUTICS, INC.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	4
	Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2017 and 2016	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
SIGNATURES		32

2

PART I. FINANCIAL INFORMATION

Item1. Financial Statements

ARATANA THERAPEUTICS, INC.

Consolidated Balance Sheets (Unaudited)

(Amounts in thousands, except share and per share data)

	September 30, 2017		December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	68,849	$	87,307
Short-term investments		1,494		996
Accounts receivable, net		9,436		87
Inventories		9,041		11,130
Prepaid expenses and other current assets		1,839		2,022
Total current assets		90,659		101,542
Property and equipment, net		1,271		1,948
Goodwill		41,023		39,382
Intangible assets, net		11,202		7,639
Restricted cash		350		350
Other long-term assets		506		545
Total assets	$	145,011	$	151,406
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,404	$	7,436
Accrued expenses		3,955		5,827
Licensing and collaboration commitment		7,000		7,000
Current portion – loans payable		12,156		14,413
Other current liabilities		—		12
Total current liabilities		26,515		34,688
Loans payable, net		24,691		25,775
Other long-term liabilities		71		540
Total liabilities		51,277		61,003
Commitments and contingencies (Notes 4 and 15)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2017 and December 31, 2016, 42,461,335 and 36,607,922issued and outstanding at September 30, 2017 and December 31, 2016, respectively		43		37
Treasury stock		(1,099)		(1,088)
Additional paid-in capital		319,848		286,909
Accumulated deficit		(217,718)		(185,593)
Accumulated other comprehensive loss		(7,340)		(9,862)
Total stockholders’ equity		93,734		90,403
Total liabilities and stockholders’ equity	$	145,011	$	151,406

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

3

ARATANA THERAPEUTICS, INC.

Consolidated Statements of Operations (Unaudited)

(Amounts in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Revenues
Licensing and collaboration revenue	$	2,192	$	—	$	3,899	$	38,151
Product sales		3,971		40		11,217		108
Total revenues		6,163		40		15,116		38,259
Costs and expenses
Cost of product sales		3,690		286		10,475		2,046
Royalty expense		441		19		1,117		57
Research and development		3,220		5,334		11,574		21,386
Selling, general and administrative		6,910		6,924		21,323		19,623
Amortization of intangible assets		85		91		235		281
Impairment of intangible assets		—		—		—		2,780
Total costs and expenses		14,346		12,654		44,724		46,173
Loss from operations		(8,183)		(12,614)		(29,608)		(7,914)
Other income (expense)
Interest income		138		116		311		276
Interest expense		(870)		(859)		(2,601)		(2,554)
Other expense, net		(5)		(14)		(14)		(50)
Total other expense		(737)		(757)		(2,304)		(2,328)
Net loss	$	(8,920)	$	(13,371)	$	(31,912)	$	(10,242)
Net loss per share, basic and diluted	$	(0.21)	$	(0.38)	$	(0.80)	$	(0.29)
Weighted average shares outstanding, basic and diluted		42,445,553		35,092,686		39,820,573		34,837,169

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

4

ARATANA THERAPEUTICS, INC.

Consolidated Statements of ComprehensiveLoss (Unaudited)

(Amounts in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Net loss	$	(8,920)	$	(13,371)	$	(31,912)	$	(10,242)
Other comprehensive income:
Foreign currency translation adjustment		801		418		2,522		891
Other comprehensive income		801		418		2,522		891
Comprehensive loss	$	(8,119)	$	(12,953)	$	(29,390)	$	(9,351)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

5

ARATANA THERAPEUTICS, INC.

Consolidated  Statementsof Cash Flows (Unaudited)

(Amounts in thousands)

	Nine Months Ended
	September 30,
	2017		2016
Cash flows from operating activities
Net loss	$	(31,912)	$	(10,242)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense		5,457		6,536
Depreciation and amortization expense		928		738
Impairment of intangible assets		—		2,780
Non-cash interest expense		369		358
Market value adjustments to inventories		394		1,552
Loss on disposition of property and equipment		—		5
Changes in operating assets and liabilities:
Accounts receivable, net		(9,349)		45
Inventories		1,695		(5,821)
Prepaid expenses and other current assets		185		(941)
Other assets		100		13
Accounts payable		(4,033)		3,712
Accrued expenses and other liabilities		(2,362)		(487)
Licensing and collaboration commitment		—		7,000
Net cash provided by (used in) operating activities		(38,528)		5,248
Cash flows from investing activities
Milestone payments for intangible assets		(3,000)		(1,000)
Purchases of property and equipment, net		(16)		(25)
Purchase of investments		(2,984)		(228,840)
Proceeds from maturities of investments		2,486		286,793
Net cash provided by (used in) investing activities		(3,514)		56,928
Cash flows from financing activities
Taxes paid for awards vested under equity incentive plans		(11)		—
Proceeds from stock option exercises		157		54
Proceeds from issuance of common stock, net of commission		27,463		12,072
Payments for common stock issuance costs		(345)		(262)
Payments for debt issuance costs		(210)		—
Payments on loans payable		(3,500)		—
Net cash provided by financing activities		23,554		11,864
Effect of exchange rate on cash		30		52
Net increase (decrease) in cash and cash equivalents		(18,458)		74,092
Cash, cash equivalents and restricted cash, beginning of period		87,657		27,105
Cash, cash equivalents and restricted cash, end of period	$	69,199	$	101,197
Supplemental disclosure of cash flow information
Cash paid for interest	$	2,237	$	2,179
Supplemental disclosure of noncash investing and financing activities:
Receivable from broker for issuance of common stock	$	—	$	605

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

6

ARATANA THERAPEUTICS, INC.

NotestoConsolidatedFinancial  Statements (Unaudited)

(Amounts in thousands, except share and per share data)

1. Summary of Significant Accounting Policies

Business Overview

Aratana Therapeutics, Inc., including its subsidiaries (the “Company” or “Aratana”) was incorporated on December 1, 2010 under the laws of the State of Delaware. The Company is a pet therapeutics company focused on licensing, developing and commercializing innovative therapeutics for dogs and cats. The Company has one operating segment: pet therapeutics.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016 and the notes thereto in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2017. In the opinion of management, all adjustments, consisting of a normal and recurring nature, considered necessary for a fair presentation, have been included.

The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $217,718 as of September 30, 2017. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash, cash equivalents and short-term investments will be sufficient to fund operations and debt obligations for at least one year from the issuance of these consolidated financial statements.

The Company expects to continue to incur operating losses for the next several years as it works to develop and commercialize its therapeutics and therapeutic candidates. If the Company cannot generate sufficient cash from operations in the future, it may seek to fund its operations through collaborations and licensing arrangements, as well as public or private equity offerings or further debt (re)financings. If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to curtail its operations which could include delaying the commercial launch of its therapeutics, discontinuing therapeutic development programs, or granting rights to develop and market therapeutics or therapeutic candidates that it would otherwise prefer to develop and market itself. As disclosed in Note 7 to the consolidated financial statements, the Company has a term loan and a revolving credit facility with an aggregate principal  balance of $36,500 as of September 30, 2017. The loan agreement requires that the Company maintain certain minimum liquidity at all times(the greater of cash equal to fifty percent (50%) of outstanding balance or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18,250. If the minimum liquidity covenant is not met, the Company may be required to repay the loans prior to their scheduled maturity dates. At September 30, 2017, the Company was in compliance with all financial covenants.

Consolidation

The Company’s consolidated financial statements include its financial statements and those of its wholly-owned subsidiaries and a consolidated variable interest entity (“VIE”)through the deconsolidation date in December 2016. Intercompany balances and transactions are eliminated in consolidation.

To determine if the Company holds a controlling financial interest in an entity, the Company first evaluates if it is required to apply the VIE model to the entity. Where the Company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives it the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company is the primary beneficiary of that VIE. When changes occur to the design of an entity, the Company reconsiders whether it is subject to the VIE model. The Company continuously evaluates whether it is the primary beneficiary of a consolidated VIE and upon determination that the Company no longer remains the primary beneficiary, the Company deconsolidates the entity and a gain or loss is recognized upon deconsolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates.

Property and Equipment, net

Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1,615 and $920 as of September 30, 2017 and December 31, 2016, respectively.

7

New Accounting Standards

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on recognizing revenue in contracts with customers. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This guidance will supersede the revenue recognition requirements in topic, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

In July 2015, the FASB approved a one-year delay in the effective date of the new revenue standard. These changes become effective for the Company on January 1, 2018. Early adoption is permitted but not before the original effective date of January 1, 2017. The standard permits the use of either the retrospective or modified retrospectiveadoption method. The Company is currently assessing the method of adoption and the impact this new guidance will have on its consolidated financial statements. The Company expects to adopt these standards using the modified retrospective method. The timing of revenue recognition for variable consideration under the Company’s licensing and collaboration agreements may be different as a result of this new guidance. The Company is reviewing its licensing and collaboration agreements for variable consideration, and if any such consideration exists, whether it should be estimated and recognized earlier than under the current revenue guidance. The Company is also assessing its product revenues under the revised guidance. To date, no material differences have been identified with respect to product revenues, however the Company’s assessment is ongoing, and the impact of adoption, if any, will depend on arrangements in place at the adoption date.

Inventory

In July 2015, the FASB issued guidance that requires entities to measure most inventory “at lower of cost and net realizable value” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a prospective basis. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Leases

In February 2016, the FASB issued guidance that requires, for operating leases, a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a modified retrospective method. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

Compensation – Stock Compensation

In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for employee share-based payment transactions including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Intangibles—Goodwill and Other

In January 2017, the FASB issued guidance on simplifying the subsequent measurement of goodwill by eliminating Step 2 (measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill) from the goodwill impairment test. Under the amendments in this guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

8

The guidance requires application using a prospective method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Compensation – Stock Compensation

In May 2017, the FASB issued guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

2. Fair Value of Financial Assets and Liabilities

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following financial assets are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

			Fair Value Measurements as of
	Carrying		September 30, 2017 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,470	$	—	$	7,470	$	—	$	7,470
Short-term investments:
Short-term marketable securities - certificates of deposit		1,494		—		1,494		—		1,494
	$	8,964	$	—	$	8,964	$	—	$	8,964

			Fair Value Measurements as of
	Carrying		December 31, 2016 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,719	$	—	$	7,719	$	—	$	7,719
Short-term investments:
Short-term marketable securities - certificates of deposit		996		—		996		—		996
	$	8,715	$	—	$	8,715	$	—	$	8,715

Certain estimates and judgments are required to develop the fair value amounts shown above. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instrument.

The following methods and assumptions were used to estimate the fair value of each material class of financial instrument:

	Cash equivalents – the fair value of the cash equivalents has been determined to be amortized cost given the short duration of the securities.
	Marketable securities (short-term) – the fair value of marketable securities has been determined to be amortized cost given the short duration of the securities.

Financial Assets and Liabilities that are not Measured at Fair Value on a Recurring Basis

The carrying amounts and estimated fair value of the Company’s financial liabilities which are not measured at fair value on a recurring basis was as follows:

	September 30, 2017
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	36,847	$	36,847

9

	December 31, 2016
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	40,188	$	40,709

Loans payable values above include both the current and the long-term loans balances as of September 30, 2017 and December 31, 2016.

Certain estimates and judgments were required to develop the fair value amounts. The fair value amount shown above is not necessarily indicative of the amounts that the Company would realize upon disposition, nor does it indicate the Company’s intent or ability to dispose of the financial instrument.

The fair value of loans payable was estimated using discounted cash flow analysis discounted at current rates.

3. Investments

Marketable Securities

Marketable securities consisted of the following:

	September 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	1,494	$	—	$	—	$	1,494
Total	$	1,494	$	—	$	—	$	1,494

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	996	$	—	$	—	$	996
Total	$	996	$	—	$	—	$	996

AtSeptember 30, 2017 andDecember 31, 2016, short-term marketable securities consisted of investments that mature within one year. Short-term marketable securities are recorded as short-term investments in the consolidated balance sheets.

4. Inventories

Inventories are stated at the lower of cost or net realizable value and consisted of the following:

	September 30, 2017		December 31, 2016
Raw materials	$	1,485	$	1,441
Work-in-process		2,114		8,153
Finished goods		5,442		1,536
	$	9,041	$	11,130

As of September 30, 2017 and December 31, 2016, the Company had non-cancellable open orders for the purchase of inventories of approximately $10,333 and $17,800, respectively.

As of September 30, 2017, raw materials included $1,124 of GALLIPRANT® inventories. As part of the manufacturing transfer of GALLIPRANT (Note 9), the Company is working to determine if these raw materials will be assumed by Eli Lilly and Company, acting on behalf of its Elanco Animal Health Division (“Elanco”). The Company anticipates to be reimbursed for any raw materials assumed by Elanco. Any raw materials not assumed by Elanco will be expensed as research and development expenses.

As of September 30, 2017, finished goods included $5,343 of GALLIPRANT inventories. These inventories were subsequently sold to Elanco in October 2017 as part of the manufacturing transfer of GALLIPRANT.

During the three and nine months ended September 30, 2017, the Company recognized inventory valuation adjustment losses in theamount of $342 and $394, respectively, from application of lower of cost or market, in cost of product sales. The losses related to GALLIPRANTinventories that were written off.

10

During the three and nine months ended September 30, 2016, the Company recognized inventory valuation adjustment losses in theamount of $111 and $1,664, respectively, from application of lower of cost or market, in cost of product sales. The losses related toTACTRESS®inventories that were written off and pre-launch GALLIPRANT inventories marked to market due to terms agreed upon in theElanco collaboration agreement (Note 9).

5. Goodwill

Goodwill is recorded as an indefinite-lived asset and is not amortized for financial reporting purposes but is tested for impairment on anannual basis or when indications of impairment exist. No goodwill impairment losses have been recognized to date. Goodwill is not expected to bedeductible for income tax purposes.

The Company completed its annual goodwill impairment testing during the third quarter of 2017. The Company elected to bypass the

qualitative assessment. The Company determined as of the testing date that it consisted of one operating segment, which is comprised ofone reporting unit. In performing step one of the assessment, the Company determined that its fair value, determined to be its marketcapitalization, was greater than its carrying value, determined to be stockholders’ equity. Based on this result, the Company determined there was no impairment of goodwill during the third quarter of 2017.

Goodwill as of September 30, 2017, was as follows:

	Gross		Impairment		Net
	Carrying Value		Losses		Carrying Value
Goodwill	$	41,023	$	—	$	41,023

The change in the net book value of goodwill for the nine months ended September 30, 2017, was as follows:

	2017
As of January 1,	$	39,382
Effect of foreign currency exchange		1,641
As of the end of the period,	$	41,023

6. Intangible Assets, Net

The change in the net book value of intangible assets for the nine months ended September 30, 2017, was as follows:

	2017
As of January 1,	$	7,639
Additions (Note 9)		3,000
Amortization expense		(235)
Effect of foreign currency exchange		798
As of the end of the period,	$	11,202

The Company recognized amortization expense of $85 and $235 for the three and ninemonths ended September 30, 2017,  respectively, and $91 and $281 for the three and nine months ended September 30, 2016, respectively.  

Unamortized Intangible Assets

Unamortized intangible assets as of September 30, 2017, were as follows:

	Net
	Carrying
	Value
Intellectual property rights acquired for in-process research and development	$	7,472

The net carrying value above includes asset impairment charges to date of $16,765.

11

Amortized Intangible Assets

Amortized intangible assets as of September 30, 2017, were as follows:

	Gross				Net		Weighted
	Carrying		Accumulated		Carrying		Average
	Value		Amortization		Value		Useful Life
Intellectual property rights for currently marketed products	$	42,652	$	38,922	$	3,730	11.7	Years

Accumulated amortization above includes both amortization expense and asset impairment charges. Asset impairment charges to date are $34,575.  Unfavorable outcomes of the Company’s development activities or the Company’s estimates of the market opportunities for the therapeutic candidates could result in additional impairment charges in future periods.

7. Debt

Loan and Security Agreements

Effective as of October 16, 2015, the Company and Vet Therapeutics, Inc., (the “Borrowers”), entered into a Loan and Security Agreement, as amended on February 24, 2017 (“Loan Agreement”), with Pacific Western Bank, or Pacific Western, as a collateral agent and Oxford Finance, LLC (the “Lenders”). The loan is secured by substantially all of the Borrowers’ personal property other than intellectual property and certain other customary exclusions. Subject to customary exceptions, the Company is not permitted to encumber its intellectual property. The outstanding principal balance under the Loan Agreement was $31,500 under the term loan facility and $5,000 under the revolving credit facility at September 30, 2017.  Under the Loan Agreement, the Company was required to make interest-only payments on the term loan for 18 months, and beginning on May 1, 2017, began to make payments of principal and accrued interest on the term loan in equal monthly installments over a term of 30 months. The Company wasrequired to make interest-only payments on the revolving credit facility until October 16, 2017, when all principal and accrued interest weredue. The term loan and revolving credit facility bear interest per annum at the greater of (i) 6.91% or (ii) 3.66% plus the prime rate, which is customarily defined. As of September 30, 2017, the interest rate for the term loan and the revolving credit facility was 7.91%. During the three and nine months ended September 30, 2017, the Company recognized interest expense of $870 and $2,601, respectively, and during the three and nine months ended September 30, 2016, the Company recognized interest expense of $851and $2,538, respectively.

Effective as of July 31, 2017, the Borrowers and Lenders entered into a second amendment to the Loan Agreement (the “Second Amendment”). The terms of the Second Amendment, among other things, extend the maturity date of the existing revolving credit facility to October 16, 2019 (the “Revolving Line Maturity Date”), with amortized equal repayments of the principal outstanding under the revolving credit facility beginning November 1, 2018, and provide a six-month interest only period for the term loans, starting on the date of the Second Amendment. The Company is not subject to any new financial covenants as a result of the Second Amendment. At the closing of the Second Amendment, the Company paid the Lenders an amendment fee of $150 and a facility fee of $60. The Company is also obligated to pay a new termination fee equal to $165 upon the earliest to occur of the Revolving Line Maturity Date, the acceleration of the revolving credit facility or the termination of the revolving credit facility. The existing termination fee of $165 was due upon the original revolving maturity date,  October 16, 2017, and was paid on October 17, 2017.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, limits or restrictions on the Borrowers’ ability to incur liens, incur indebtedness, make certain restricted payments, make certain investments, merge, consolidate, make an acquisition, enter into certain licensing arrangements and dispose of certain assets. In addition, the Loan Agreement contains customary events of default that entitle the Lenders to cause the Borrowers’ indebtedness under the Loan Agreement to become immediately due and payable. The events of default, some of which are subject to cure periods, include, among others, a non-payment default, a covenant default, the occurrence of a material adverse change, the occurrence of an insolvency, a material judgment default, defaults regarding other indebtedness and certain actions by governmental authorities. Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4% per annum will apply to all obligations owed under the Loan Agreement.

The Loan Agreement requires that the Company maintain certain minimum liquidity at all times (the greater of cash equal to fifty percent (50%) of outstanding credit extensions or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18,250. If the minimum liquidity covenant is not met, the Company may be required to repay the term loan and the revolving credit facility prior to their scheduled maturity dates. At September 30, 2017, the Company was in compliance with all financial covenants.

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The Company’s loans payable balance as of September 30, 2017, was as follows:

Principal amounts
Term loan, 7.91%, principal payments from February 1, 2018 through October 16, 2019	$	31,500
Revolving credit facility, 7.91%, principal payments from November 1, 2018 through October 16, 2019		5,000
Add: accretion of final payment and termination fees		724
Less: unamortized debt issuance costs		(377)
As of the end of the period	$	36,847

As of September 30, 2017,  $12,000 and $156 related to the term loan and the revolving credit facility, respectively, were classified as current portion – loans payable.

8. Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2017		December 31, 2016
Accrued expenses:
Payroll and related expenses	$	1,933	$	2,321
Professional fees		244		219
Royalty expense		475		71
Interest expense		241		247
Research and development costs		429		364
Unbilled inventories		—		465
Accrued loss on a firm purchase commitment		—		1,983
Milestone		480		17
Other		153		140
Total	$	3,955	$	5,827

9. Agreements

RaQualia Pharma Inc. (“RaQualia”)

On December 27, 2010, the Company entered into two Exclusive License Agreements with RaQualia (as amended, the “RaQualia Agreements”) that granted the Company global rights, subject to certain exceptions for injectables in Japan, Korea, China and Taiwan for development and commercialization of licensed animal health products for compounds RQ-00000005 (ENTYCE®, also known as AT-002) and RQ-00000007 (GALLIPRANT®, also known as AT-001). The Company will be required to pay RaQualia remaining milestone payments associated with GALLIPRANT and ENTYCE of up to  $4,000 and $6,000, respectively, upon the Company’s achievement of certain development, regulatory and commercial milestones, as well as mid-single digit royalties on the Company’s or the Company’s sublicensee’s product sales.

The Company achieved a $3,000 milestone during the ninemonths ended September 30, 2017, whichwas paid and capitalized as an intangible asset in the first quarter of 2017. As of September 30, 2017, the Company had paid $8,500 in milestone paymentssince execution of the RaQualia Agreements.During the fourth quarter of 2017, the Company achieved an additional $3,000 milestone related to the RaQualia Agreements, which the Company anticipates will be paid in the fourth quarter of 2017. The Company does not anticipate that any additional milestones will be achieved in the next 12 months.

Elanco

GALLIPRANT

On April 22, 2016, the Company entered into a Collaboration, License, Development and Commercialization Agreement (as amended, the “Collaboration Agreement”) with Elanco pursuant to which the Company granted Elanco rights to develop, manufacture, market and commercialize the Company’s products based on licensed grapiprant rights and technology, including GALLIPRANT (collectively, “Grapiprant Products”). Pursuant to the Collaboration 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, the Company received a non-refundable, non-creditable upfront payment of $45,000.  The Company is entitled to a  $4,000 milestone paymentupon European approval of a  Grapiprant Productfor the treatment of pain and inflammation,  another$4,000payment upon achievement of a development milestone related to the manufacturing of a Grapiprant Product, and payments up to $75,000 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.

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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. The Company is responsible for all development activities required to obtain the first registration or regulatory approval for a Grapiprant Product for use in dogs in each of the European Union (“the EU Product Registration”) and the United States, and Elanco is responsible for all other development activities. First registration for a Grapiprant Product in the United States was achieved before the completion of the Collaboration Agreement.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 additional registration or regulatory approval of the Grapiprant Products, provided that the Company’s contribution to such development fees and expenses is capped at $7,000 (“R&D Cap”), which was recorded as licensing and collaboration commitment liability in the consolidated balance sheets at September 30, 2017 and December 31, 2016. The Company classified the licensing and collaboration commitment liability as a current liability due to the Company having no control over when R&D Cap expenses will be incurred and the expected timing of R&D Cap expenses being unknown as of September 30, 2017.The licensing and collaboration commitment liability will be reduced in future periods as the related expenses are incurred by Elanco and paid for by the Company. Any remaining balance not paid to Elanco will be recognized as licensing and collaboration revenue on December 31, 2018, when the Company’s obligation to fund 25% of Elanco’s development efforts expires.

Commencing on the effective date of the Collaboration Agreement, the Company is responsible for the manufacture and supply of all of Elanco’s reasonable requirements ofactive pharmaceutical ingredient (“API”) and/or finished Grapiprant Productsunder the supply terms agreed upon pursuant to the Collaboration Agreement. However, Elanco retains the ability to assume all or a portion of the manufacturing responsibility during the term of the Collaboration Agreement. On April 28, 2017, the Company and Elanco entered into an amendment (the “Amendment”) to the Collaboration Agreement. Under the Amendment, Elanco has agreed to submit binding purchase orders to the Company, within 15 days of the effective date of the Amendment, for certain finished Grapiprant Products to be produced from certain batches of API the Company has agreed to purchase from its third-party manufacturer (the “API Batches”). In addition, Elanco has agreed to pay the Company for the API Batches within 30 days after the Company provides Elanco with proof of payment to the manufacturer for such API Batches. The Amendment provides that, in the event Elanco provides notice of its intent to assume responsibility for manufacturing, Elanco would assume all responsibilities of the Company with respect to any undelivered API, including paying the third-party manufacturer for such undelivered API.In July 2017, pursuant to Sections 8.2.2 and 10.1(c) of the Collaboration Agreement, as amended, Elanco provided the Company notice of its intent to assume responsibility for manufacturing of the Grapiprant Products and its intent to assume the applicable regulatory approvals.

In September 2017, the Company and Elanco finalized the transfer of the applicable regulatory approvals in the United States and the responsibility for manufacturing of Grapiprant Products to Elanco. In connection with this assumption of manufacturing responsibility, Elanco agreed to compensate the Company $10,832 for certain Grapiprant Product inventories and manufacturing considerations. During the three months ended September 30, 2017, the Company recognized $1,000of licensing and collaboration revenues and $67 of product sales, as well as  $3,733 in reimbursement of previously incurred inventory costs, which is included in accounts receivable, net as of September 30, 2017, related to the assumption of manufacturing responsibility by Elanco. In addition, the Company believes all residual matters related to the assumption of manufacturing responsibility by Elanco and the sale of remaining GALLIPRANT inventories will be concluded in the fourth quarter of 2017. The Company anticipates it will recognize approximately$6,000 of remaining product sales related to the assumption of manufacturing responsibility by Elanco in the fourth quarter of 2017.  

On April 22, 2016, in connection with the Collaboration Agreement, the Company entered into a Co-Promotion Agreement (the “Co-Promotion Agreement”) with Elanco to co-promote Grapiprant Products in the United States.

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

10. Common Stock

As of September 30, 2017, there were 42,461,335 shares of the Company’s common stock outstanding, net of 540,464 shares of unvested restricted common stock.

At-the-Market Offering

On October 16, 2015, the Company entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital, Inc. (“Barclays”) pursuant to which the Company could sell from time to time, at its option, up to an aggregate of $52,000 of shares of its common stock (the “Shares”) through Barclays, as sales agent (“ATM Program”). Sales of the Shares were made under the Company’s previously filed and then effective registration statement on Form S-3 (Reg. No. 333-197414), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Sales Agreement, the Shares could be sold at market prices, at negotiated prices or at prices related to the prevailing market price. The Company paid Barclays a commission of 2.75% of the gross proceeds from the sale of the Shares.

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On April 28, 2017, the Company terminated its Sales Agreement. Prior to termination, the Company sold approximately $18,000 of the $52,000 available to be sold under the Sales Agreement. The Company terminated the Sales Agreement because it did not intend to raise additional capital through the ATM Program, and no additional shares of the Company’s common stock were sold pursuant to the Sales Agreement. The Company did not incur any termination penalties as a result of its termination of the Sales Agreement.

Prior to the termination of the Sales Agreement, the Company sold 546,926 Shares for aggregate net proceeds of $2,788 in 2017.

Registered Direct Offering

On May 3, 2017, the Company entered into a Placement Agency Agreement (“PAA”) with Barclays, pursuant to which Barclays agreed to serve as placement agent for an offering of shares of common stock. In conjunction with the PAA, on May 3, 2017, the Company also entered into a Securities Purchase Agreement with certain investors for the sale by the Company of 5,000,000 shares of common stock at a purchase price of $5.25 per share (the “Offering”). The shares of common stock were offered and sold pursuant to the Company’spreviously filed and then effective registration statement on Form S-3 (File No. 333-197414) and a related prospectus supplement. The Company agreed to pay Barclays an aggregate fee equal to 6.0% of the gross proceeds received by the Company from the Offering. The Offering closed on May 9, 2017, andthe Company received aggregate net proceeds from the Offering of approximately $24,400, after deducting placement agent fees of $1,575 and offering expenses of $273.

Shelf Registration Statement

On August 4, 2017, the Company filed a shelf registration statement on Form S-3 (Reg. No. 333-219681) (the “Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”). The Shelf Registration Statement was declared effective by the SEC on August 16, 2017.

The Shelf Registration Statement allows the Company to offer and sell, from time to time, up to $100,000 of common stock, preferred stock, debt securities, warrants, units or any combination of the foregoing in one or more future public offerings. The terms of any future offering would be determined at the time of the offering and would be subject to market conditions and approval by the Company’s Board of Directors. Any offering of securities covered by the Shelf Registration Statement will be made only by means of a written prospectus and prospectus supplement authorized and filed by the Company.

11. Stock-Based Awards

2010 Equity Incentive Plan

Activity related to stock options under the 2010 Equity Incentive Plan (the “2010 Plan”) for the nine months ended September 30, 2017, was as follows:

				Weighted
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(In Years)
Outstanding as of December 31, 2016	65,931	$	3.73	6.09	$	228
Granted	—		—
Exercised	(8,537)		0.40
Forfeited	—		—
Expired	—		—
Outstanding as of September 30, 2017	57,394	$	4.22	5.36	$	110

No stock options have been granted under the 2010 Plan since the effective date of the2013 Incentive Award Plan (the “2013 Plan”).For the nine months ended September 30, 2017, the total intrinsic value of options exercised was $53 and the total received from stock option exercises was $3.

2013 Incentive Award Plan

On January 1, 2017, the annual increase in the number of shares available for issuance under the2013 Planwas determined to be 1,203,369 shares in accordance with the automatic annual increase provisions of the 2013 Plan. As of September 30, 2017, there were 1,598,005 shares available for future grant under the 2013 Plan.

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Activity related to stock options under the 2013 Plan for the nine months ended September 30, 2017, was as follows:

				Weighed
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(in years)
Outstanding as of December 31, 2016	2,251,518	$	12.43	7.78	$	2,261
Granted	530,900		7.80
Exercised	(48,947)		3.14
Forfeited	(29,508)		11.23
Expired	(112,023)		18.96
Outstanding as of September 30, 2017	2,591,940	$	14.03	7.69	$	1,235

For the nine months ended September 30, 2017, the weighted average grant date fair value of stock options granted was $5.15. For the nine months ended September 30, 2017, the total intrinsic value of options exercised was $120 and the total received from stock option exercises was $154.

Activity related to restricted stock under the 2013 Plan for the nine months ended September 30, 2017, was as follows:

		Weighted
		Average Grant
	Shares	Date Fair Value
Unvested restricted common stock as of December 31, 2016	461,463	$	8.30
Issued	339,700		7.85
Vested	(249,907)		9.44
Forfeited	(10,792)		7.32
Unvested restricted common stock as of September 30, 2017	540,464	$	7.51

For the nine months ended September 30, 2017, the total fair value of restricted common stock vested was $1,810. The Company did not receive cash proceeds for any of the restricted common stock issued during the nine months ended September 30, 2017.

Stock-Based Compensation

Upon adoption of ASU 2016-09 (Compensation – Stock Compensation)  on January 1, 2017, the Company elected to change its accounting policy to account for forfeitures as they occur.The change was applied on a modified retrospective basis with a cumulative-effect adjustment to accumulated deficit  of  $213 (which increasedthe accumulated deficit) as of January 1, 2017. Prior to adoption of this guidance the Company estimated forfeitures.

The Company recorded stock-based compensation expense related to stock options and restricted stock as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Cost of product sales and inventories	$	42	$	30	$	126	$	79
Research and development		229		227		717		856
Selling, general and administrative		1,528		1,831		4,614		5,601
	$	1,799	$	2,088	$	5,457	$	6,536

As of  September 30, 2017,  the Company had an aggregate of $5,595 and $3,021 of unrecognized stock-based compensation expense for options outstanding and restricted stock awards, respectively, which is expected to be recognized over a weighted average period of 2.29 years and 1.85years, respectively.

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12. Net Loss Per Share

Basic and diluted net loss per share was calculated as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Numerator:
Net loss	$	(8,920)	$	(13,371)	$	(31,912)	$	(10,242)
Denominator:
Weighted average shares outstanding, basic and diluted		42,445,553		35,092,686		39,820,573		34,837,169
Net loss per share, basic and diluted	$	(0.21)	$	(0.38)	$	(0.80)	$	(0.29)

Stock options for the purchase of 2,649,334and 2,412,238 shares of common stock were excluded from the computation of diluted net loss per shareattributable to common stockholders for the three and ninemonths ended September 30, 2017 and 2016, respectively,because those options had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the period.

13. Income Taxes

The Company recorded no income tax expense or benefit during the three and ninemonths ended September 30, 2017 and 2016, due to a full valuation allowance recognized against its deferred tax assets.

14. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss,  net of their related tax effects, were as follows:

	Foreign		Accumulated
	Currency		Other
	Translation		Comprehensive
	Adjustment		Loss
As of December 31, 2016	$	(9,862)	$	(9,862)
Foreign currency translation adjustment		2,522		2,522
As of September 30, 2017	$	(7,340)	$	(7,340)

15.  Legal Contingencies

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business, including those related to patents, product liability and government investigations. Except as described below, the Company is not presently a party to any litigation which it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material effect on its financial statements. The Company accrues contingent liabilities when it is probable that a future liability has been incurred and such liability can be reasonably estimated.

In February 2017, two purported class action lawsuits were filed in the United States District Court for the Southern District of New York against the Company and two of its current officers. Those cases have been consolidated into one purported class action lawsuit under the caption, In re Aratana Therapeutics, Inc. Securities Litigation, Case No. 1:17-cv-00880. The consolidated lawsuit, which was amended in August 2017, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Company’s business, operations, prospects and performance during the proposed class period of March 16, 2015 to March 13, 2017. The Company intends to vigorously defend all claims asserted, including by filing a motion to dismiss. Given the early stage of the litigation, at this time a loss is not probable or reasonably estimable.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. Some of the statements contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In this Quarterly Report on Form 10-Q, the words “anticipates,” “believes,” “expects,” “intends,” “future,” “could,” “estimates,” “plans,” “would,” “should,” “potential,” “continues” and similar words or expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements. The forward-looking statements herein include without limitation, statements with respect to our plans and strategy for our business, anticipated timing of regulatory submissions and approvals, anticipated timing of availability and announcement of study results, anticipated timing of launch and commercialization of therapeutic candidates, ongoing efforts in preparation for commercialization of therapeutic candidates, beliefs regarding market opportunities for our products and potential success of our therapeutic candidates; the transfer of manufacturing responsibility for GALLIPRANT under the Collaboration Agreement with Elanco; and anticipated milestone payments. These and other forward-looking statements included in this Quarterly Report on Form 10-Q involve risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: our history of operating losses and our expectation that we will continue to incur losses for the foreseeable future; failure to obtain sufficient capital to fund our operations; risks relating to the impairment of intangible assets; risks relating to the anticipated discontinuation of BLONTRESS and TACTRESS;effects ofstockholder class action lawsuits; unstable market and economic conditions; restrictions on our financial flexibility due to the terms of our credit facility; our substantial dependence upon the commercial success of our therapeutics GALLIPRANT, ENTYCE and NOCITA; development of our biologic therapeutic candidates is dependent upon relatively novel technologies and uncertain regulatory pathways, and biologics may not be commercially viable; denial or delay of regulatory approval for our existing or future therapeutic candidates; failure of our therapeutics, and our current or future therapeutic candidates that may obtain regulatory approval to achieve market acceptance or commercial success; effects of product liability lawsuits; failure to realize anticipated benefits of our acquisitions and difficulties associated with integrating the acquired businesses; development of pet therapeutics is a lengthy and expensive process with an uncertain outcome; competition in the pet therapeutics market, including from generic alternatives to our therapeutic candidates, and failure to compete effectively; failure to identify, license or acquire, develop and commercialize additional therapeutic candidates; failure to attract and retain senior management and key scientific personnel; our reliance on third-party manufacturers, suppliers and collaborators; regulatory restrictions on the marketing of our approved therapeutics and therapeutic candidates; our small commercial sales organization, and any failure to create a sales force or collaborate with third-parties to commercialize our approved therapeutics and therapeutic candidates; difficulties in managing the growth of our company; significant costs of being a public company; risks related to the restatement of our financial statements for the year ended December 31, 2013, and the identification of a material weakness in our internal control over financial reporting; changes in distribution channels for pet therapeutics; consolidation of our veterinarian customers; limitations on our ability to use our net operating loss carryforwards; impacts of generic products; safety or efficacy concerns with respect to our therapeutics; effects of system failures or security breaches; failure to perform under our agreements with Elanco Animal Health, or termination thereof; failure to obtain ownership of issued patents covering our therapeutic candidates or failure to prosecute or enforce licensed patents; failure to comply with our obligations under our license agreements; effects of patent or other intellectual property lawsuits; failure to protect our intellectual property; changing patent laws and regulations; non-compliance with any legal or regulatory requirements; litigation resulting from the misuse of our confidential information; the uncertainty of the regulatory approval process and the costs associated with government regulation of our therapeutic candidates; failure to obtain regulatory approvals in foreign jurisdictions; effects of legislative or regulatory reform with respect to pet therapeutics; the volatility of the price of our common stock; our status as an emerging growth company, which could make our common stock less attractive to investors; dilution of our common stock as a result of future financings; the influence of certain significant stockholders over our business; and provisions in our charter documents and under Delaware law could delay or prevent a change in control. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2017, and the “Risk Factors” section of this Quarterly Report on Form 10-Q, could cause actual results to differ materially from those indicated by the forward-looking statements made in this Quarterly Report on Form 10-Q.

Overview

We are a pet therapeutics company focused on licensing, developing and commercializing innovative therapeutics for dogs and cats. We operate in one business segment: pet therapeutics. Our current portfolio includes multiple therapeutics and therapeutic candidates in development consisting of both small molecule pharmaceuticals and biologics. We intend for our portfolio to capture opportunities in unmet or underserved medical conditions in dogs and cats.

We have three United States Food and Drug Administration (“FDA”) approved therapeutics including, GALLIPRANT® (grapiprant tablets) for the control of pain and inflammation associated with osteoarthritis in dogs; ENTYCE® (capromorelin oral solution) for appetite stimulation in dogs; and NOCITA® (bupivacaine liposome injectable suspension) as a local post-operative analgesia for cranial cruciate ligament surgery in dogs. BLONTRESS® and TACTRESS® are our two canine-specific monoclonal antibody (MAb) therapies that are fully licensed by the United States Department of Agriculture (“USDA”) to aid in the treatment of dogs with B-cell

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and T-cell lymphoma, respectively, which we plan to discontinue in November 2017 pursuant to our previously communicated rationale (see “Manufacturing and Supply Chain” below for additional information). Our pipeline has multiple therapeutic candidates in development for the potential treatment of pain, management of weight loss, viral diseases, allergy and cancer for dogs and cats.

We have incurred significant net losses since our inception. These losses have resulted principally from costs incurred in connection with in-licensing our therapeutic candidates, research and development activities, and selling, general and administrative costs associated with our operations. As of September 30, 2017, we had a deficit accumulated since inception of $217.7 million and cash, cash equivalents, restricted cash and short-term investments of $70.7 million.

Business Updates

During the three months ended September 30, 2017, we continued to grow our account base for GALLIPRANT with a majority of accounts reordering. The third quarter of 2017 included sequential increases for both GALLIPRANT product revenues, which we are selling in the United States in collaboration with Eli Lilly and Company, operating on behalf of its Elanco Animal Health division (“Elanco”), and GALLIPRANT licensing and collaboration revenue. Additionally, as of September 22, 2017, pursuant to the Collaboration, License, Development and Commercialization Agreement (the “Collaboration Agreement”), Elanco assumed ownership of regulatory filings and manufacturing responsibility for the applicable products based on licensed grapiprant rights and technology, including GALLIPRANT (collectively, the “Grapiprant Products”). We believe all residual matters related to the assumption by Elanco of manufacturing responsibility for Grapiprant Products will be concluded during the fourth quarter of 2017.

In the third quarter of 2017, for NOCITA, we continued to increase the number of accounts and the penetration within those accounts, with re-order rates continuing to increase compared to the second quarter of 2017.

As of late-October 2017, our third FDA-approved therapeutic, ENTYCE, is commercially available to veterinarians in the United States. ENTYCE is the only FDA-approved therapeutic for appetite stimulation in dogs.

We continued to advance our late-stage pipeline of therapeutic candidates for dogs and cats. Specifically, in October 2017, the AT-003 pivotal field effectiveness study in cats was submitted as part of the effectiveness technical section to the FDA’s Center for Veterinary Medicine (“CVM”) to support the intended NOCITA label expansion. Additionally, VetStem BioPharma Inc., our exclusive license partner responsible for development of AT-016, submitted the chemistry, manufacturing and controls (“CMC”) technical section to CVM in late-October 2017.

Research and Development

The following table identifies the most advanced therapeutic candidates being developed under CVM or the USDA’s Center for Veterinary Biologics (“CVB”) regulations and their current regulatory status:

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ENTYCE (capromorelin oral solution) for dogs

ENTYCE was approved by the FDA for appetite stimulation in dogs in 2016. On October 13, 2017, we announced that we received CVM approval of the prior-approval supplement (“PAS”) submission for the transfer and scale-up of manufacturing of ENTYCE, and as of late-October 2017, the therapeutic is commercially available to veterinarians in the United States.

AT-003 (bupivacaine liposome injectable suspension) for cats

In July 2017, we completed an FDA-concurred pivotal field effectiveness study evaluating bupivacaine liposome injectable suspension for post-operative pain management in cats. The multi-center, placebo-controlled, randomized and masked pivotal field effectiveness study evaluated approximately 200 client-owned cats undergoing an elective onychectomy. Results from the study showed bupivacaine liposome injectable suspension met protocol-defined efficacy success criteria, which were statistically significant (p<0.05). The therapeutic candidate was well-tolerated. In October 2017, data from the study was submitted as part of the effectiveness technical section to CVM. We have now submitted all major technical sections to CVM, which if approved, would support the filing of a supplemental New Animal Drug Application (“NADA”) with CVM to expand the NOCITA label to include cats in 2018.

AT-016 (allogeneic adipose-derived stem cells) for dogs

VetStem BioPharma Inc., our exclusive license partner responsible for development of AT-016, an adipose-derived allogeneic stem cell therapeutic candidate for osteoarthritis pain in dogs, submitted the CMC technical section to CVM in late-October 2017.

In addition to United States regulatory and development activities, we also have regulatory and development efforts outside the United States:

AT-001 (grapiprant) for dogs in Europe

Under the Collaboration Agreement, Elanco has exclusive rights to our Grapiprant Products globally outside the United States. We are responsible under the Collaboration Agreement for all development activities required to obtain the first regulatory approval for grapiprant for use in dogs in the European Union (“EU”) and Elanco is responsible for all other development activities. In February 2016, we filed a marketing authorization application with the European Medicines Agency (“EMA”) for grapiprant in dogs in the EU. In cooperation with Elanco, in October 2017, we submitted additional information to the EMA. We continue to anticipate that the EMA will issue a positive opinion for GALLIPRANT in dogs in the EU in late-2017 and marketing authorization in the first half of 2018. We anticipate Elanco and Aratana will make additional EMA regulatory filings in 2018, which if successful, could result in achieving a $4.0 million milestone payment in 2019.

Manufacturing and Supply Chain

We manage third-party manufacturers to supply active pharmaceutical ingredient (“API”), drug product and packaged product for the development and commercialization of our small molecule product candidates. We have chosen to rely on third-party contract manufacturer organizations (“CMOs”) rather than devote resources toward developing or acquiring internal manufacturing facilities.

ENTYCE

On October 13, 2017, we received approval of our PAS from CVM for the transfer and commercial scale-up of the API of ENTYCE, and we made ENTYCE commercially available in late-October 2017. We continue to manufacture additional commercial inventory of ENTYCE and we expect that we will be able to maintain continuous supply of ENTYCE to meet anticipated demand.

GALLIPRANT

GALLIPRANT has been available to customers since January 2017, and as part of the Collaboration Agreement, we agreed to provide the initial commercial supply of GALLIPRANT. In July 2017, Elanco provided us with notice of its intent to assume responsibility for manufacturing of the Grapiprant Products and its intent to assume the regulatory approvals. As of September 22, 2017, Elanco assumed ownership of the NADA and manufacturing responsibility for GALLIPRANT. GALLIPRANT is currently available in 20 mg and 60 mg tablets in a variety of packaging configurations. The 100 mg tablets of GALLIPRANT remain on backorder and with the transfer of manufacturing responsibility, Elanco is responsible for determining when the 100 mg tablets will become commercially available.

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BLONTRESS and TACTRESS

As previously disclosed, we believe customer demand does not justify manufacturing additional BLONTRESS or TACTRESS and therefore, we intend to discontinue BLONTRESS and TACTRESS in November 2017. We intend to close our USDA-licensed facility in San Diego by the end of the year, which will result in us no longer holding a USDA establishment license nor the USDA product licenses for BLONTRESS and TACTRESS. We intend to focus our oncology research and development efforts on other therapeutic candidates in our pipeline, including the Live Listeria Vector platform. Notwithstanding the shift in the focus of our research and development efforts, we plan to remain opportunistic with respect to potential development and commercial collaboration opportunities for monoclonal antibodies.

Recent Developments

Shelf Registration Statement

On August 4, 2017, we filed a shelf registration statement on Form S-3 (Reg. No. 333-219681) (the “Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”). The Shelf Registration Statement was declared effective by the SEC on August 16, 2017.

The Shelf Registration Statement allows us to offer and sell, from time to time, up to $100.0 million of common stock, preferred stock, debt securities, warrants, units or any combination of the foregoing in one or more future public offerings. The terms of any future offering would be determined at the time of the offering and would be subject to market conditions and approval by the Company’s Board of Directors. Any offering of securities covered by the Shelf Registration Statement will be made only by means of a written prospectus and prospectus supplement authorized and filed by us.

Amendment to Loan Agreement

Effective as of July 31, 2017, we amended our Loan Agreement. See“Financial Condition, Liquidity and Capital Resources - Indebtedness” below for additional information.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and revenues, costs and expenses and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies through September 30, 2017, from those discussed in our Annual Report on Form 10-K for the fiscal year ended December31, 2016, filed with the SEC on March 14, 2017.

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Results of Operations

Comparison of the Three and NineMonths Ended September 30, 2017 and 2016

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017		2016		% Change		2017		2016		% Change
	(Dollars in thousands)						(Dollars in thousands)
Revenues:
Licensing and collaboration revenue	$	2,192	$	—	NA		$	3,899	$	38,151	(89.8)	%
Product sales		3,971		40	>100.0	%		11,217		108	>100.0	%
Total revenues		6,163		40	>100.0	%		15,116		38,259	(60.5)	%
Costs and expenses:
Cost of product sales		3,690		286	>100.0	%		10,475		2,046	>100.0	%
Royalty expense		441		19	>100.0	%		1,117		57	>100.0	%
Research and development		3,220		5,334	(39.6)	%		11,574		21,386	(45.9)	%
Selling, general and administrative		6,910		6,924	(0.2)	%		21,323		19,623	8.7	%
Amortization of intangible assets		85		91	(6.6)	%		235		281	(16.4)	%
Impairment of intangible assets		—		—	NA			—		2,780	(100.0)	%
Other income (expense):
Interest income		138		116	19.0	%		311		276	12.7	%
Interest expense		(870)		(859)	1.3	%		(2,601)		(2,554)	1.8	%
Other expense, net		(5)		(14)	(64.3)	%		(14)		(50)	(72.0)	%

Revenues

During the three and nine months ended September 30, 2017, total revenues increased and decreased by $6.1 million and $23.1 million,respectively, as compared to the corresponding 2016 periods. Theincrease in total revenues during the three months ended September 30, 2017, was due to an increase in net product sales of NOCITA and GALLIPRANT inventory sales to Elanco of $3.9 million and an increase of $2.2 million in licensing collaboration revenue from the Collaboration Agreement and the Co-Promotion Agreement with Elanco (collectively, the “Elanco GALLIPRANT Agreements”). Thedecrease in total revenuesduring the nine months ended September 30, 2017,  was due to  adecrease of$34.3 millionin licensing and collaboration revenue from the Elanco GALLIPRANT Agreements, partially offset by anincrease of$11.1million in net product sales primarily due to net sales of GALLIPRANT and NOCITA.Total revenues for the nine months ended September 30, 2016, included $38.0 million of licensing and collaboration revenue recognized from the Elanco GALLIPRANT Agreements. During the three and nine months ended September 30, 2017, product sales consisted of net sales of GALLIPRANT, NOCITA, BLONTRESS and TACTRESS.  GALLIPRANT product sales during the three and nine months ended September 30, 2017, consisted of net sales of finished goods to Elanco under the supply terms of the Collaboration Agreement. NOCITA net sales were $0.7 million and $1.7 million during the three and nine months ended September 30, 2017, respectively, as compared to $0 for each of the corresponding 2016 periods. Since the third quarter of 2016, we believe growth in NOCITA product sales is primarily a result of strong re-order rates, which accounted for more than 85% of NOCITA revenues since the launch in October 2016. 

We believe that product sales for the remainder of 2017 will be composed primarily of product sales of NOCITA, GALLIPRANT, and ENTYCE, for which sales began in late-October 2017. We believe NOCITA and ENTYCE product sales in the remainder of 2017 will be dependent on our continuing efforts to commercialize the products. With respect to GALLIPRANT, in September 2017, Elanco assumed all manufacturing responsibilities for GALLIPRANT under the Collaboration Agreement, and we believe the transition of such responsibilities will be completed by December 31, 2017. See “Manufacturing and Supply Chain” above for additional information. Future product sales of GALLIPRANT under the supply terms of the Collaboration Agreement will be limited to the agreed residual inventories sold to Elanco. At this time, we believe customer demand does not justify manufacturing additional BLONTRESS or TACTRESS. Therefore, both therapeutics will no longer be commercially available after mid-November 2017. We believe any future licensing and collaboration revenue in the remainder of 2017 will be substantially dependent on Elanco’s ability to successfully commercialize GALLIPRANT in accordance with the Elanco GALLIPRANT Agreements.

Cost of product sales

During the three and nine months ended September 30, 2017, cost of product sales increased by $3.4 million and $8.4 million, respectively, as compared to the corresponding 2016 periods. Theseincreases were primarily due to cost of product sales of GALLIPRANT and NOCITA.  During the three and nine months ended September 30, 2017,  we recognized inventory valuation adjustment losses in theamount of $0.3 million and $0.4 million, respectively, from application of lower of cost or market, in cost of product sales. The losses related to GALLIPRANTinventories that were written off. During the three and nine months ended September 30, 2016, we recognized inventory valuation adjustment losses in the amount of $0.1 million and $1.7 million, respectively, from the write-off of TACTRESS inventories and pre-launch GALLIPRANT inventories marked to market due to terms agreed upon in the Collaboration Agreement.

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For the remainder of 2017, we anticipate improvement in cost of product sales as a percentage of product revenues as process validation batches of ENTYCE, which were previously written down, are being sold. After all manufacturing responsibilities for GALLIPRANT are transferred and current inventories are sold to Elanco, we believe the cost of product sales as a percentage of overall product revenues will improve as compared to 2017.

Royalty expense

During the three and nine months ended September 30, 2017, royalty expense increased by $0.4 million and $1.1 million, respectively, as compared to the corresponding 2016 periods. The increases were primarily a result of sales of GALLIPRANT and NOCITA.We believe any future royalty expensein the remainder of 2017 will be substantially dependent on Elanco’s ability to successfully commercialize GALLIPRANT in accordance with the Elanco GALLIPRANT Agreements, and our continuing efforts to commercialize NOCITA and ENTYCE.

Research and development

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017		2016		% Change		2017		2016		% Change
	(Dollars in thousands)						(Dollars in thousands)
Contracted development costs	$	2,229	$	4,014	(44.5)	%	$	8,669	$	10,802	(19.7)	%
Milestones		—		250	(100.0)	%		—		6,450	(100.0)	%
Personnel costs		835		900	(7.2)	%		2,527		3,577	(29.4)	%
Other costs		156		170	(8.2)	%		378		557	(32.1)	%
Total research and development	$	3,220	$	5,334	(39.6)	%	$	11,574	$	21,386	(45.9)	%

During the three and ninemonths ended September 30, 2017, research and development expense decreased by $2.1 million and $9.8  million, respectively, as compared to the corresponding 2016 periods. The decrease during the three months ended September 30, 2017, was due primarily to a decrease of $1.8 million in contracted development costs, specifically fewer ongoing pivotal programs, and due to the prioritization of spending for ongoing programs, a decrease of $0.3 million in milestone payments and a decrease of $0.1 million in personnel and other costs. The decrease during the nine months endedSeptember 30, 2017, was due primarily to a decrease of $6.5 million in milestone payments, a decrease of $2.1 million in contracted development costs due to the prioritization of spending for ongoing programs, a $1.1 million decrease in personnel costs due to lower headcount in 2017, and a $0.2 million decrease in other costs.

We expect that in the remainder of 2017 our research and development expenses will be primarily related to expanding the label of our approved therapeutics for additional indications and/or species and advancing our AT-016 and AT-018 programs.

Selling, general and administrative

During the three and ninemonths ended September 30, 2017, selling, general and administrative expense decreasedby $14,000 and increased by$1.7 million, respectively, as compared to the corresponding 2016periods. The increase during the  nine months ended September 30, 2017, was due to an increaseof $2.9 million in personnel expenses primarily as a result of higher sales and marketing headcount, partially offset by a decrease of $1.2 millionin other expenses due to the substantial completion of the build out of our corporate infrastructure and market preparation. We expect that in the remainder of 2017 our selling, general and administrative expense will remain relatively constant as we have substantially completed the build out of our sales organization and corporate infrastructure in the support of the continued commercialization of NOCITA and ENTYCE.

Impairment of intangible assets

During the nine months ended September 30, 2017, impairment of intangible assets decreasedby $2.8 million, as compared to the corresponding 2016 period as there were no intangible asset impairment charges recognized during the nine months ended September 30, 2017. The impairment of intangible assets during the nine months ended September 30, 2016, was related to impairment charges of TACTRESS ($0.6 million) and AT-007 ($2.2 million).

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Financial Condition, Liquidity and Capital Resources

Our financial condition is summarized as follows:

	September 30, 2017		December 31, 2016		Change %
	(Dollars in thousands)
Financial assets:
Cash and cash equivalents	$	68,849	$	87,307	(21.1)	%
Marketable securities - short-term		1,494		996	50.0	%
Total cash, cash equivalents and marketable securities	$	70,343	$	88,303	(20.3)	%
Borrowings:
Loans payable, net	$	36,847	$	40,188	(8.3)	%
Working capital:
Current assets	$	90,659	$	101,542	(10.7)	%
Current liabilities		26,515		34,688	(23.6)	%
Total working capital	$	64,144	$	66,854	(4.1)	%

We have incurred significant net losses since our inception. These losses have resulted principally from costs incurred in connection with in-licensing of our therapeutic candidates, research and development activities and selling, general and administrative costs associated with our operations. As of September 30, 2017, we had an accumulated deficit of $217.7 million and cash, cash equivalents and short-term investments of $70.3million.

We expect to continue to incur operating losses for the next several years as we work to develop and commercialize our therapeutics and therapeutic candidates. If we cannot generate sufficient cash from operations in the future, we may seek to fund our operations through collaborations and licensing arrangements, as well as public or private equity offerings or further debt (re)financings. If we are not able to raise additional capital on terms acceptable to us, or at all, as and when needed, we may be required to curtail our operations which could include delaying the commercial launch of our therapeutics, discontinuing therapeutic development programs, or granting rights to develop and market therapeutics or therapeutic candidates that we would otherwise prefer to develop and market ourselves.As disclosed in Note 7 to our consolidated financial statements, we have a term loan and a revolving credit facility with an aggregate principal balance of $36.5 million as of September 30, 2017. The terms of the loan agreement require us to maintain certain minimum liquidity at all times (the greater of cash equal to fifty percent (50%) of outstanding balance or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18.3 million. If the minimum liquidity is not met, we may be required to repay the loans prior to their scheduled maturity dates. At September 30, 2017, we were in compliance with all financial covenants. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that our existing cash, cash equivalents and short-term investments of $70.3 million as of September 30, 2017,  will allow us to fund our operations and our debt obligations for at least one year from the issuance of our consolidated financial statements.Based on our current operating plan, we believe that our cash, cash equivalents and short-term investments will be sufficient to fund our operations and debt obligations through at least 2018. Our current operating plan contemplates continued growth in sales of GALLIPRANT and market adoption of ENTYCE.

Cash, Cash Equivalents and Investments

Until required for another use in our business, we typically invest our cash reserves in bank deposits, certificates of deposit, and other interest bearing debt instruments in accordance with our investment policy. It is our policy to mitigate credit risk in our cash reserves and investments by maintaining a well-diversified portfolio that limits the amount of exposure as to institution, maturity, and investment type. The value of our investments, however, may be adversely affected by increases in interest rates, instability in the global financial markets that reduces the liquidity of securities included in our portfolio, and by other factors which may result in declines in the value of the investments. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio if the declines are other-than-temporary or sell investments for less than our acquisition cost which could adversely impact our financial position and our overall liquidity.

At-the-Market Offering

On October 16, 2015, we entered into the Sales Agreement with Barclays Capital, Inc. (“Barclays”), pursuant to which wecould sell from time to time, at our option, up to an aggregate of $52.0 million of shares of its common stock (the “Shares”) through Barclays, as sales agent (“ATM Program”). Sales of the Shares were made under our previously filed and then effective registration statement on Form S-3 (Reg. No. 333-197414), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Sales Agreement, the Shares could be sold at market prices, at negotiated prices or at prices related to the prevailing market price. We paid Barclays a commission of 2.75% of the gross proceeds from the sale of the Shares.

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On April 28, 2017, we terminated our Sales Agreement. Prior to termination, we sold approximately $18.0 million of the $52.0 million available to be sold under the Sales Agreement. We terminated the Sales Agreement because we did not intend to raise additional capital through the ATM Program, and no additional shares of our common stock were sold pursuant to the Sales Agreement. We did not incur any termination penalties as a result of our termination of the Sales Agreement.

Prior to the termination of the Sales Agreement, we sold 546,926 Shares for aggregate net proceeds of approximately $2.8 million in 2017.

Registered Direct Offering

On May 3, 2017, we entered into a Placement Agency Agreement (“PAA”) with Barclays, pursuant to which Barclays agreed to serve as placement agent for an offering of shares of common stock. In conjunction with the PAA, on May 3, 2017, we also entered into a Securities Purchase Agreement with certain investors for the sale by us of 5,000,000 shares of common stock at a purchase price of $5.25 per share (the “Offering”). The shares of common stock were offered and sold pursuant to our previously filed and then effective registration statement on Form S-3 (File No. 333-197414) and a related prospectus supplement. We agreed to pay Barclays an aggregate fee equal to 6.0% of the gross proceeds received by us from the Offering. The Offering closed on May 9, 2017. We received aggregate net proceeds from the Offering of approximately $24.4 million, after deducting placement agent fees of $1.6 million and offering expenses of $0.3 million.

Shelf Registration Statement

On August 4, 2017, we filed a shelf registration statement on Form S-3 (Reg. No. 333-219681) (the “Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”). The Shelf Registration Statement was declared effective by the SEC on August 16, 2017.

The Shelf Registration Statement allows us to offer and sell, from time to time, up to $100.0 million of common stock, preferred stock, debt securities, warrants, units or any combination of the foregoing in one or more future public offerings. The terms of any future offering would be determined at the time of the offering and would be subject to market conditions and approval by the Company’s Board of Directors. Any offering of securities covered by the Shelf Registration Statement will be made only by means of a written prospectus and prospectus supplement authorized and filed by us.

Indebtedness

On October 16, 2015, we and Vet Therapeutics (together the “Borrowers”) entered into a Loan and Security Agreement, as amended on February 24, 2017 (the “Loan Agreement”) with Pacific Western Bank (“Pacific Western”) as collateral agent (“Collateral Agent”) and a lender and Oxford Finance LLC as a lender (“Oxford” and together with Pacific Western, the “Lenders”), pursuant to which the Lenders agreed to make available to the Borrowers, a term loan in an aggregate principal amount up to $35.0 million (the “Term Loan”), and a revolving credit facility in an aggregate principal amount up to $5.0 million (the “Revolving Line”), subject to certain conditions to funding. The Borrowers were required to make interest-only payments on the Term Loan for 18 months, and beginning on May 1, 2017, began to make payments of principal and accrued interest on the Term Loan in equal monthly installments over a term of 30 months. The Term Loan and the Revolving Line bear interest per annum at the greater of (i) 6.91% or (ii) 3.66% plus the prime rate, which is customarily defined. Under the Loan Agreement, all principal and accrued interest on the Term Loan were due on October 16, 2019 (the “Term Loan Maturity Date”), and all principal and accrued interest on the Revolving Line were due on October 16, 2017 (the “Revolving Maturity Date”).

As security for their obligations under the Loan Agreement, the Borrowers granted a security interest in substantially all of their existing and after-acquired assets except for their intellectual property and certain other customary exclusions. Subject to customary exceptions, the Borrowers are not permitted to encumber their intellectual property.

Upon execution of the Loan Agreement, the Borrowers were obligated to pay a facility fee to the Lenders of $0.2 million and an agency fee to the Collateral Agent of $0.1 million. In addition, the Borrowers are or will be obligated to pay a final payment fee equal to 3.30% of such Term Loan being prepaid or repaid with respect to the Term Loan upon the earliest to occur of the Term Loan Maturity Date, the acceleration of any Term Loan or the prepayment of a Term Loan. The Borrowers were obligated to pay a termination fee equal to 3.30% of the highest outstanding amount of the Revolving Line with respect to the Revolving Line upon the earliest to occur of the Prior Revolving Maturity Date, the acceleration of the Revolving Line or the termination of the Revolving Line. The Borrowers will also be obligated to pay an unused-line fee equal to 0.25% per annum of the average unused portion of the Revolving Line.

Effective as of July 31, 2017, we amended the Loan Agreement (the “Second Amendment”). The terms of the Second Amendment, among other things, extend the maturity of the Revolving Line to October 16, 2019 (the “Revolving Line Maturity Date”), with amortized equal repayments of the principal outstanding under the Revolving Line beginning November 1, 2018, and provide a six (6) month interest only period for the Term Loan, starting on the date of the Second Amendment.

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We are not subject to any new financial covenants as a result of the Second Amendment. At the closing of the Second Amendment, we paid the Lenders an amendment fee of $0.2 million and a facility fee of $0.1 million. We are obligated to pay a new termination fee equal to $0.2 million upon the earliest to occur of the Revolving Line Maturity Date, the acceleration of the Revolving Line or the termination of the Revolving Line. The existing termination fee of $0.2 million was due on the original revolving maturity date, October 16, 2017, and was paid on October 17, 2017.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, limits or restrictions on the Borrowers’ ability to incur liens, incur indebtedness, make certain restricted payments, make certain investments, merge, consolidate, make an acquisition, enter into certain licensing arrangements and dispose of certain assets. In addition, the Loan Agreement contains customary events of default that entitle the Lenders to cause the Borrowers’ indebtedness under the Loan Agreement to become immediately due and payable. The events of default, some of which are subject to cure periods, include, among others, a non-payment default, a covenant default, the occurrence of a material adverse change, the occurrence of an insolvency, a material judgment default, defaults regarding other indebtedness and certain actions by governmental authorities. Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4% per annum will apply to all obligations owed under the Loan Agreement.

The Loan Agreement requires that we maintain certain minimum liquidity at all times, which as of September 30, 2017, was approximately $18.3  million. If the minimum liquidity requirement is not met, the Borrowers may be required to repay the loans prior to their scheduled maturity dates.At September 30, 2017, the Borrowers were in compliance with all financial covenants, including the minimum liquidity covenant.

Working Capital

We define working capital as current assets less current liabilities. The decrease in working capital at September 30, 2017,  from December 31, 2016, reflects a decrease in total current assets of $10.9 million and a decrease in total current liabilities of $8.2 million. The decrease in total current assets was primarily driven by a decrease in cash and cash equivalents due to payments for our research and development activities related to our programs, payments for inventories, milestones and selling, general and administrative expenses. The decrease in total current liabilities was primarily a result of payments for GALLIPRANT inventories and a decrease in the current portion of loans payable due to amending payment terms under our Loan Agreement on July 31, 2017.  

Cash Flows

A summary of our cash flows for the nine months ended September 30, 2017 and 2016, is as follows:

	Nine Months Ended
	September 30,
	2017		2016
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(38,528)	$	5,248
Net cash provided by (used in) investing activities	$	(3,514)	$	56,928
Net cash provided by financing activities	$	23,554	$	11,864

Net cash provided by (used in) operating activities

During the nine months ended September 30, 2017, net cash used in operating activities was $38.5 million. We had a net loss of $31.9 million which includes a non-cash expense for stock-based compensation of $5.5 million, a non-cash depreciation and amortization expense of $0.9 million, a non-cash interest expense of $0.4 million, and market value adjustments to inventories of $0.4 million. Our net loss was primarily attributed to our research and development activities related to our programs and our selling, general and administrative expenses, partially offset by licensing and collaboration revenues of $3.9 millionfrom the Elanco GALLIPRANT Agreements and product sales of $11.2 million. Net cash used in operating assets and liabilities was primarily due to a decrease in accounts payable of $4.0 million, a decrease in accrued expenses and other liabilities of $2.4 million, and an increase in accounts receivable of $9.3 million, partially offset by a decrease in inventories of $1.7 million, a decrease in prepaid expenses and other current assets of $0.2 million and a decrease in other assets of $0.1 million. The decrease in accounts payable was primarily related to payments for GALLIPRANT inventories and trade payables. The increase in accounts receivable and thedecrease in inventories were primarily related to GALLIPRANT sales. Also, accounts receivableincreased due to receivables under the Elanco GALLIPRANT Agreements.

During the nine months ended September 30, 2016, net cash provided by operating activities was $5.2 million. We had a net loss of $10.2 million which includes an adjustment of a non-cash expense for stock-based compensation of $6.5 million, a non-cash depreciation and amortization expense of $0.7 million, a non-cash impairment of intangible assets of $2.8 million, a non-cash interest expense of $0.4 million, and market value adjustments to inventories of $1.6 million. Our net loss was primarily attributed to our research and development activities related to our programs and our selling, general and administrative expenses, partially offset by licensing and collaboration revenues of $38.0 million from the Collaboration Agreement. Net cash provided by operating assets and liabilities consisted primarily of an increase in accounts payable of $3.7 million, an increase of $7.0 million in licensing and collaboration commitment under the Collaboration Agreement, partially offset by a decrease in accrued expenses and other liabilities of $0.5 million, an increase in prepaid expenses and other current assets of $0.9 million, and an increase in inventories of $5.8 million.

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The increase in inventories was primarily related to GALLIPRANT and ENTYCE pre-launch inventories. The increase in accounts payable was primarily related to ENTYCE inventories and trade payables. The increase in prepaid expenses and other current assets was primarily due to advance payments made for our outsourced research and development activities.

Net cash provided by (used in) investing activities

During the nine months ended September 30, 2017, net cash used in investing activities was $3.5 million, which primarily consisted of a $3.0 million milestone payment for intangible assets for currently marketed products and the purchases of investments of $3.0 million, partially offset by proceeds from the maturities and sales of investments of $2.5 million.

During the nine months ended September 30, 2016, net cash provided by investing activities was $56.9 million, which primarily consisted of the proceeds from the maturities and sales of investments of $286.8 million, partially offset by the purchases of investments of $228.8 million and $1.0 million milestone payments for intangible assets for currently marketed products.

Net cash provided by financing activities

During the nine months ended September 30, 2017,  net cash provided by financing activities was $23.6 million. Net cash provided by financing activities consisted of the net proceeds from the issuance of common stock of $27.5 million and proceeds from stock option exercises of $0.2 million, partially offset by $3.5 million of payments on loans payable, $0.3 million of payments for common stock issuance costs and $0.2 million of payments for debt issuance costs.

During the nine months ended September 30, 2016, net cash provided by financing activities was $11.9 million. Net cash provided by financing activities consisted of the net proceeds from issuance of common stock of $12.1 million, partially offset by $0.3 million of payments for common stock issuance costs, and the proceeds of stock option exercises of $0.1 million. 

Contractual Obligations andOff-Balance Sheet Arrangements

Contractual Obligations

Our contractual obligations primarily consist of our obligations under our loans payable, non-cancellable operating leases, minimum royalties and other purchase obligations, excluding amounts related to other funding commitments, contingent development, regulatory and commercial milestone payments, contract manufacturer commitments and off-balance sheet arrangements as described below. As of September 30, 2017, there were no material changes in our contractual obligations since December 31, 2016, except for the contract manufacturer commitments described below.

Other Funding Commitments

As of September 30, 2017, we have several ongoing development programs in various stages of the regulatory process. Our most significant expenditures are to clinical research and contract manufacturing organizations. The contracts are generally cancellable, with notice, at our option.

Contingent Development, Regulatory and Commercial Milestone Payments

Based on our development plans as of September 30, 2017, we have committed to make potential future milestone payments to third parties of up to approximately $108.6 million, of which $77.4 million are for commercial milestones, as part of our various collaborations, including licensing and development programs. Approximately $68.9 million of the commercial milestones relate to the achievement of various sales thresholds. Payments under these agreements generally become due and payable only upon achievement of certain development, regulatory or commercial milestones. Because the achievement of these milestones had not occurred or was not considered probable as of September 30, 2017, such contingencies have not been recorded in our consolidated financial statements, except for $0.5 million due to our former commercial licensee of BLONTRESS.

We anticipate that we may pay approximately $3.6 million and $5.0 million of milestone payments during the remainder of 2017, and the next 12 months, respectively, provided various development, regulatory or commercial milestones are achieved. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones that may not be achieved.

Contract Manufacturer Commitments

Our independent CMOs manufacture our products and product components based on ourforecasts. These forecasts are based on estimates of future demand for our products, which are in turn based on available historical trends and an analysis from sales and product marketing organizations, adjusted for overall market conditions. In order to reduce manufacturing lead times and plan for adequate supply, we may issue forecasts and orders for components and products that are non-cancelable. As of September 30, 2017 and December 31, 2016, we had non-cancellable open orders for the purchase of inventories of $10.3 million and $17.8 million, respectively.

27

Off-Balance Sheet Arrangements

We have not engaged in the use of any off-balance sheet arrangements, such as structured finance entities or special purpose entities.

Recently Issued and Adopted Accounting Pronouncements

For a discussion of new accounting standards please read Note 1, “Summary of Significant Accounting Policies –New Accounting Standards” to our consolidated financial statements included within this report.

28

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risks, and the ways we manage them are summarized in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017. As of September 30, 2017, there were no material changes to our market risks or management of such risks since December 31, 2016.

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2017.  

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) identified in connection with the evaluation of our internal control performed during the fiscal quarter ended September 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

29

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Except as described below, we are not presently a party to any litigation that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, financial condition or cash flows.

In February 2017, two purported class action lawsuits were filed in the United States District Court for the Southern District of New York against the Company and two of its current officers. Those cases have been consolidated into one purported class action lawsuit under the caption, In re Aratana Therapeutics, Inc. Securities Litigation, Case No. 1:17-cv-00880. The consolidated lawsuit, which was amended in August 2017, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Company’s business, operations, prospects and performance during the proposed class period of March 16, 2015 to March 13, 2017. The Company intends to vigorously defend all claims asserted, including by filing a motion to dismiss. Given the early stage of the litigation, at this time a loss is not probable or reasonably estimable.

Item 1A. Risk Factors

Our business faces significant risks and uncertainties, which may have a material adverse effect on our business prospects, financial condition and results of operations, and you should carefully consider them.

There have been no material changes in the nine months ended September 30, 2017, to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Repurchases of Common Stock

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

30

Item 6. Exhibits

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit		Filing Date		Filed/ Furnished Herewith
3.1	Restated Certificate of Incorporation	8-K	001-35952		3.1		7/3/13
3.2	Amended and Restated Bylaws	8-K	001-35952		3.2		7/3/13
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								*
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								*
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002								**
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002								**
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*    Filed herewith.

**  Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

31

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, thereunto duly authorized.

	ARATANA THERAPEUTICS, INC.
Date:  November 3,  2017	By:	/s/    Steven St. Peter
		Steven St. Peter, M.D.
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 3,  2017	By:	/s/    Craig Tooman
		Craig Tooman
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

32

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Steven St. Peter, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aratana Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November3, 2017

/s/ Steven St. Peter

Steven St. Peter, M.D.

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Craig Tooman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aratana Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2017

/s/ Craig Tooman

Craig Tooman

Chief Financial Officer and Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven St. Peter, Chief Executive Officer of Aratana Therapeutics, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the period endedSeptember 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 3, 2017

/s/ Steven St. Peter

Steven St. Peter, M.D.

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig Tooman, Chief Financial Officer and Treasurer of Aratana Therapeutics, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the periodended September 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 3, 2017

/s/ Craig Tooman

Craig Tooman

Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Entity Registrant Name	ARATANA THERAPEUTICS, INC.
Entity Central Index Key	0001509190
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	petx
Entity Common Stock, Shares Outstanding		42,999,561

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 68,849	$ 87,307
Short-term investments	1,494	996
Accounts receivable, net	9,436	87
Inventories	9,041	11,130
Prepaid expenses and other current assets	1,839	2,022
Total current assets	90,659	101,542
Property and equipment, net	1,271	1,948
Goodwill	41,023	39,382
Intangible assets, net	11,202	7,639
Restricted cash	350	350
Other long-term assets	506	545
Total assets	145,011	151,406
Current liabilities:
Accounts payable	3,404	7,436
Accrued expenses	3,955	5,827
Licensing and collaboration commitment	7,000	7,000
Current portion – loans payable	12,156	14,413
Other current liabilities		12
Total current liabilities	26,515	34,688
Loans payable, net	24,691	25,775
Other long-term liabilities	71	540
Total liabilities	51,277	61,003
Commitments and contingencies (Notes 4 and 15)
Stockholders' equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2017 and December 31, 2016, 42,461,335 and 36,607,922 issued and outstanding at September 30, 2017 and December 31, 2016, respectively	43	37
Treasury stock	(1,099)	(1,088)
Additional paid-in capital	319,848	286,909
Accumulated deficit	(217,718)	(185,593)
Accumulated other comprehensive loss	(7,340)	(9,862)
Total stockholders' equity	93,734	90,403
Total liabilities and stockholders' equity	$ 145,011	$ 151,406

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	42,461,335	36,607,922
Common stock, shares outstanding	42,461,335	36,607,922

XML

Consolidated Statements Of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues
Licensing and collaboration revenue	$ 2,192		$ 3,899	$ 38,151
Product sales	3,971	$ 40	11,217	108
Total revenues	6,163	40	15,116	38,259
Costs and expenses
Cost of product sales	3,690	286	10,475	2,046
Royalty expense	441	19	1,117	57
Research and development	3,220	5,334	11,574	21,386
Selling, general and administrative	6,910	6,924	21,323	19,623
Amortization of intangible assets	85	91	235	281
Impairment of intangible assets				2,780
Total costs and expenses	14,346	12,654	44,724	46,173
Loss from operations	(8,183)	(12,614)	(29,608)	(7,914)
Other income (expense)
Interest income	138	116	311	276
Interest expense	(870)	(859)	(2,601)	(2,554)
Other expense, net	(5)	(14)	(14)	(50)
Total other expense	(737)	(757)	(2,304)	(2,328)
Net loss	$ (8,920)	$ (13,371)	$ (31,912)	$ (10,242)
Net loss per share, basic and diluted	$ (0.21)	$ (0.38)	$ (0.80)	$ (0.29)
Weighted average shares outstanding, basic and diluted	42,445,553	35,092,686	39,820,573	34,837,169

XML

Consolidated Statements Of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements Of Comprehensive Loss [Abstract]
Net loss	$ (8,920)	$ (13,371)	$ (31,912)	$ (10,242)
Other comprehensive income:
Foreign currency translation adjustment	801	418	2,522	891
Other comprehensive income	801	418	2,522	891
Comprehensive loss	$ (8,119)	$ (12,953)	$ (29,390)	$ (9,351)

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities
Net loss	$ (31,912)	$ (10,242)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense	5,457	6,536
Depreciation and amortization expense	928	738
Impairment of intangible assets		2,780
Non-cash interest expense	369	358
Market value adjustments to inventories	394	1,552
Loss on disposition of property and equipment		5
Changes in operating assets and liabilities:
Accounts receivable, net	(9,349)	45
Inventories	1,695	(5,821)
Prepaid expenses and other current assets	185	(941)
Other assets	100	13
Accounts payable	(4,033)	3,712
Accrued expenses and other liabilities	(2,362)	(487)
Licensing and collaboration commitment		7,000
Net cash provided by (used in) operating activities	(38,528)	5,248
Cash flows from investing activities
Milestone payments for intangible assets	(3,000)	(1,000)
Purchases of property and equipment, net	(16)	(25)
Purchase of investments	(2,984)	(228,840)
Proceeds from maturities of investments	2,486	286,793
Net cash provided by (used in) investing activities	(3,514)	56,928
Cash flows from financing activities
Taxes paid for awards vested under equity incentive plans	(11)
Proceeds from stock option exercises	157	54
Proceeds from issuance of common stock, net of commission	27,463	12,072
Payments for common stock issuance costs	(345)	(262)
Payments for debt issuance costs	(210)
Payments on loans payable	(3,500)
Net cash provided by financing activities	23,554	11,864
Effect of exchange rate on cash	30	52
Net increase (decrease) in cash and cash equivalents	(18,458)	74,092
Cash, cash equivalents and restricted cash, beginning of period	87,657	27,105
Cash, cash equivalents and restricted cash, end of period	69,199	101,197
Supplemental disclosure of cash flow information
Cash paid for interest	$ 2,237	2,179
Supplemental disclosure of noncash investing and financing activities:
Receivable from broker for issuance of common stock		$ 605

XML

Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Business Overview

Aratana Therapeutics, Inc., including its subsidiaries (the “Company” or “Aratana”) was incorporated on December 1, 2010 under the laws of the State of Delaware. The Company is a pet therapeutics company focused on licensing, developing and commercializing innovative therapeutics for dogs and cats. The Company has one operating segment: pet therapeutics.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016 and the notes thereto in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2017. In the opinion of management, all adjustments, consisting of a normal and recurring nature, considered necessary for a fair presentation, have been included.

The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $217,718 as of September 30, 2017. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash, cash equivalents and short-term investments will be sufficient to fund operations and debt obligations for at least one year from the issuance of these consolidated financial statements.

The Company expects to continue to incur operating losses for the next several years as it works to develop and commercialize its therapeutics and therapeutic candidates. If the Company cannot generate sufficient cash from operations in the future, it may seek to fund its operations through collaborations and licensing arrangements, as well as public or private equity offerings or further debt (re)financings. If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to curtail its operations which could include delaying the commercial launch of its therapeutics, discontinuing therapeutic development programs, or granting rights to develop and market therapeutics or therapeutic candidates that it would otherwise prefer to develop and market itself. As disclosed in Note 7 to the consolidated financial statements, the Company has a term loan and a revolving credit facility with an aggregate principal  balance of $36,500 as of September 30, 2017. The loan agreement requires that the Company maintain certain minimum liquidity at all times(the greater of cash equal to fifty percent (50%) of outstanding balance or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18,250. If the minimum liquidity covenant is not met, the Company may be required to repay the loans prior to their scheduled maturity dates. At September 30, 2017, the Company was in compliance with all financial covenants.

Consolidation

The Company’s consolidated financial statements include its financial statements and those of its wholly-owned subsidiaries and a consolidated variable interest entity (“VIE”)through the deconsolidation date in December 2016. Intercompany balances and transactions are eliminated in consolidation.

To determine if the Company holds a controlling financial interest in an entity, the Company first evaluates if it is required to apply the VIE model to the entity. Where the Company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives it the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company is the primary beneficiary of that VIE. When changes occur to the design of an entity, the Company reconsiders whether it is subject to the VIE model. The Company continuously evaluates whether it is the primary beneficiary of a consolidated VIE and upon determination that the Company no longer remains the primary beneficiary, the Company deconsolidates the entity and a gain or loss is recognized upon deconsolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates.

Property and Equipment, net

Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1,615 and $920 as of September 30, 2017 and December 31, 2016, respectively.

New Accounting Standards

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on recognizing revenue in contracts with customers. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This guidance will supersede the revenue recognition requirements in topic, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

In July 2015, the FASB approved a one-year delay in the effective date of the new revenue standard. These changes become effective for the Company on January 1, 2018. Early adoption is permitted but not before the original effective date of January 1, 2017. The standard permits the use of either the retrospective or modified retrospectiveadoption method. The Company is currently assessing the method of adoption and the impact this new guidance will have on its consolidated financial statements. The Company expects to adopt these standards using the modified retrospective method. The timing of revenue recognition for variable consideration under the Company’s licensing and collaboration agreements may be different as a result of this new guidance. The Company is reviewing its licensing and collaboration agreements for variable consideration, and if any such consideration exists, whether it should be estimated and recognized earlier than under the current revenue guidance. The Company is also assessing its product revenues under the revised guidance. To date, no material differences have been identified with respect to product revenues, however the Company’s assessment is ongoing, and the impact of adoption, if any, will depend on arrangements in place at the adoption date.

Inventory

In July 2015, the FASB issued guidance that requires entities to measure most inventory “at lower of cost and net realizable value” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a prospective basis. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Leases

In February 2016, the FASB issued guidance that requires, for operating leases, a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a modified retrospective method. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

Compensation – Stock Compensation

In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for employee share-based payment transactions including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Intangibles—Goodwill and Other

In January 2017, the FASB issued guidance on simplifying the subsequent measurement of goodwill by eliminating Step 2 (measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill) from the goodwill impairment test. Under the amendments in this guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The guidance requires application using a prospective method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Compensation – Stock Compensation

In May 2017, the FASB issued guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

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Fair Value Of Financial Assets And Liabilities

9 Months Ended

Sep. 30, 2017

Fair Value Of Financial Assets And Liabilities [Abstract]

Fair Value Of Financial Assets And Liabilities

2. Fair Value of Financial Assets and Liabilities

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following financial assets are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

			Fair Value Measurements as of
	Carrying		September 30, 2017 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,470	$	—	$	7,470	$	—	$	7,470
Short-term investments:
Short-term marketable securities - certificates of deposit		1,494		—		1,494		—		1,494
	$	8,964	$	—	$	8,964	$	—	$	8,964

			Fair Value Measurements as of
	Carrying		December 31, 2016 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,719	$	—	$	7,719	$	—	$	7,719
Short-term investments:
Short-term marketable securities - certificates of deposit		996		—		996		—		996
	$	8,715	$	—	$	8,715	$	—	$	8,715

Certain estimates and judgments are required to develop the fair value amounts shown above. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instrument.

The following methods and assumptions were used to estimate the fair value of each material class of financial instrument:

	Cash equivalents – the fair value of the cash equivalents has been determined to be amortized cost given the short duration of the securities.
	Marketable securities (short-term) – the fair value of marketable securities has been determined to be amortized cost given the short duration of the securities.

Financial Assets and Liabilities that are not Measured at Fair Value on a Recurring Basis

The carrying amounts and estimated fair value of the Company’s financial liabilities which are not measured at fair value on a recurring basis was as follows:

	September 30, 2017
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	36,847	$	36,847

	December 31, 2016
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	40,188	$	40,709

Loans payable values above include both the current and the long-term loans balances as of September 30, 2017 and December 31, 2016.

Certain estimates and judgments were required to develop the fair value amounts. The fair value amount shown above is not necessarily indicative of the amounts that the Company would realize upon disposition, nor does it indicate the Company’s intent or ability to dispose of the financial instrument.

The fair value of loans payable was estimated using discounted cash flow analysis discounted at current rates.

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Investments

9 Months Ended

Sep. 30, 2017

Investments [Abstract]

Investments

3. Investments

Marketable Securities

Marketable securities consisted of the following:

	September 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	1,494	$	—	$	—	$	1,494
Total	$	1,494	$	—	$	—	$	1,494

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	996	$	—	$	—	$	996
Total	$	996	$	—	$	—	$	996

At September 30, 2017 and December 31, 2016, short-term marketable securities consisted of investments that mature within one year. Short-term marketable securities are recorded as short-term investments in the consolidated balance sheets.

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Inventories

9 Months Ended

Sep. 30, 2017

Inventories [Abstract]

Inventories

4. Inventories

Inventories are stated at the lower of cost or net realizable value and consisted of the following:

	September 30, 2017		December 31, 2016
Raw materials	$	1,485	$	1,441
Work-in-process		2,114		8,153
Finished goods		5,442		1,536
	$	9,041	$	11,130

As of September 30, 2017 and December 31, 2016, the Company had non-cancellable open orders for the purchase of inventories of approximately $10,333 and $17,800, respectively.

As of September 30, 2017, raw materials included $1,124 of GALLIPRANT® inventories. As part of the manufacturing transfer of GALLIPRANT (Note 9), the Company is working to determine if these raw materials will be assumed by Eli Lilly and Company, acting on behalf of its Elanco Animal Health Division (“Elanco”). The Company anticipates to be reimbursed for any raw materials assumed by Elanco. Any raw materials not assumed by Elanco will be expensed as research and development expenses.

As of September 30, 2017, finished goods included $5,343 of GALLIPRANT inventories. These inventories were subsequently sold to Elanco in October 2017 as part of the manufacturing transfer of GALLIPRANT.

During the three and nine months ended September 30, 2017, the Company recognized inventory valuation adjustment losses in theamount of $342 and $394, respectively, from application of lower of cost or market, in cost of product sales. The losses related to GALLIPRANTinventories that were written off.

During the three and nine months ended September 30, 2016, the Company recognized inventory valuation adjustment losses in theamount of $111 and $1,664, respectively, from application of lower of cost or market, in cost of product sales. The losses related toTACTRESS®inventories that were written off and pre-launch GALLIPRANT inventories marked to market due to terms agreed upon in theElanco collaboration agreement (Note 9).

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Goodwill

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets [Abstract]

Goodwill

5. Goodwill

Goodwill is recorded as an indefinite-lived asset and is not amortized for financial reporting purposes but is tested for impairment on anannual basis or when indications of impairment exist. No goodwill impairment losses have been recognized to date. Goodwill is not expected to bedeductible for income tax purposes.

The Company completed its annual goodwill impairment testing during the third quarter of 2017. The Company elected to bypass the

qualitative assessment. The Company determined as of the testing date that it consisted of one operating segment, which is comprised ofone reporting unit. In performing step one of the assessment, the Company determined that its fair value, determined to be its marketcapitalization, was greater than its carrying value, determined to be stockholders’ equity. Based on this result, the Company determined there was no impairment of goodwill during the third quarter of 2017.

Goodwill as of September 30, 2017, was as follows:

	Gross		Impairment		Net
	Carrying Value		Losses		Carrying Value
Goodwill	$	41,023	$	—	$	41,023

The change in the net book value of goodwill for the nine months ended September 30, 2017, was as follows:

	2017
As of January 1,	$	39,382
Effect of foreign currency exchange		1,641
As of the end of the period,	$	41,023

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Intangible Assets, Net

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets [Abstract]

Intangible Assets, Net

6. Intangible Assets, Net

The change in the net book value of intangible assets for the nine months ended September 30, 2017, was as follows:

	2017
As of January 1,	$	7,639
Additions (Note 9)		3,000
Amortization expense		(235)
Effect of foreign currency exchange		798
As of the end of the period,	$	11,202

The Company recognized amortization expense of $85 and $235 for the three and nine months ended September 30, 2017, respectively, and $91 and $281 for the three and nine months ended September 30, 2016, respectively.  

Unamortized Intangible Assets

Unamortized intangible assets as of September 30, 2017, were as follows:

	Net
	Carrying
	Value
Intellectual property rights acquired for in-process research and development	$	7,472

The net carrying value above includes asset impairment charges to date of $16,765.

Amortized Intangible Assets

Amortized intangible assets as of September 30, 2017, were as follows:

	Gross				Net		Weighted
	Carrying		Accumulated		Carrying		Average
	Value		Amortization		Value		Useful Life
Intellectual property rights for currently marketed products	$	42,652	$	38,922	$	3,730	11.7	Years

Accumulated amortization above includes both amortization expense and asset impairment charges. Asset impairment charges to date are $34,575.  Unfavorable outcomes of the Company’s development activities or the Company’s estimates of the market opportunities for the therapeutic candidates could result in additional impairment charges in future periods.

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Debt

9 Months Ended

Sep. 30, 2017

Debt [Abstract]

Debt

7. Debt

Loan and Security Agreements

Effective as of October 16, 2015, the Company and Vet Therapeutics, Inc., (the “Borrowers”), entered into a Loan and Security Agreement, as amended on February 24, 2017 (“Loan Agreement”), with Pacific Western Bank, or Pacific Western, as a collateral agent and Oxford Finance, LLC (the “Lenders”). The loan is secured by substantially all of the Borrowers’ personal property other than intellectual property and certain other customary exclusions. Subject to customary exceptions, the Company is not permitted to encumber its intellectual property. The outstanding principal balance under the Loan Agreement was $31,500 under the term loan facility and $5,000 under the revolving credit facility at September 30, 2017.  Under the Loan Agreement, the Company was required to make interest-only payments on the term loan for 18 months, and beginning on May 1, 2017, began to make payments of principal and accrued interest on the term loan in equal monthly installments over a term of 30 months. The Company was required to make interest-only payments on the revolving credit facility until October 16, 2017, when all principal and accrued interest were due. The term loan and revolving credit facility bear interest per annum at the greater of (i) 6.91% or (ii) 3.66% plus the prime rate, which is customarily defined. As of September 30, 2017, the interest rate for the term loan and the revolving credit facility was 7.91%. During the three and nine months ended September 30, 2017, the Company recognized interest expense of $870 and $2,601, respectively, and during the three and nine months ended September 30, 2016, the Company recognized interest expense of $851and $2,538, respectively.

Effective as of July 31, 2017, the Borrowers and Lenders entered into a second amendment to the Loan Agreement (the “Second Amendment”). The terms of the Second Amendment, among other things, extend the maturity date of the existing revolving credit facility to October 16, 2019 (the “Revolving Line Maturity Date”), with amortized equal repayments of the principal outstanding under the revolving credit facility beginning November 1, 2018, and provide a six-month interest only period for the term loans, starting on the date of the Second Amendment. The Company is not subject to any new financial covenants as a result of the Second Amendment. At the closing of the Second Amendment, the Company paid the Lenders an amendment fee of $150 and a facility fee of $60. The Company is also obligated to pay a new termination fee equal to $165 upon the earliest to occur of the Revolving Line Maturity Date, the acceleration of the revolving credit facility or the termination of the revolving credit facility. The existing termination fee of $165 was due upon the original revolving maturity date,  October 16, 2017, and was paid on October 17, 2017.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, limits or restrictions on the Borrowers’ ability to incur liens, incur indebtedness, make certain restricted payments, make certain investments, merge, consolidate, make an acquisition, enter into certain licensing arrangements and dispose of certain assets. In addition, the Loan Agreement contains customary events of default that entitle the Lenders to cause the Borrowers’ indebtedness under the Loan Agreement to become immediately due and payable. The events of default, some of which are subject to cure periods, include, among others, a non-payment default, a covenant default, the occurrence of a material adverse change, the occurrence of an insolvency, a material judgment default, defaults regarding other indebtedness and certain actions by governmental authorities. Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4% per annum will apply to all obligations owed under the Loan Agreement.

The Loan Agreement requires that the Company maintain certain minimum liquidity at all times (the greater of cash equal to fifty percent (50%) of outstanding credit extensions or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18,250. If the minimum liquidity covenant is not met, the Company may be required to repay the term loan and the revolving credit facility prior to their scheduled maturity dates. At September 30, 2017, the Company was in compliance with all financial covenants.

The Company’s loans payable balance as of September 30, 2017, was as follows:

Principal amounts
Term loan, 7.91%, principal payments from February 1, 2018 through October 16, 2019	$	31,500
Revolving credit facility, 7.91%, principal payments from November 1, 2018 through October 16, 2019		5,000
Add: accretion of final payment and termination fees		724
Less: unamortized debt issuance costs		(377)
As of the end of the period	$	36,847

As of September 30, 2017,  $12,000 and $156 related to the term loan and the revolving credit facility, respectively, were classified as current portion – loans payable.

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Accrued Expenses

9 Months Ended

Sep. 30, 2017

Accrued Expenses [Abstract]

Accrued Expenses

8. Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2017		December 31, 2016
Accrued expenses:
Payroll and related expenses	$	1,933	$	2,321
Professional fees		244		219
Royalty expense		475		71
Interest expense		241		247
Research and development costs		429		364
Unbilled inventories		—		465
Accrued loss on a firm purchase commitment		—		1,983
Milestone		480		17
Other		153		140
Total	$	3,955	$	5,827

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Agreements

9 Months Ended

Sep. 30, 2017

Agreements [Abstract]

Agreements

9. Agreements

RaQualia Pharma Inc. (“RaQualia”)

On December 27, 2010, the Company entered into two Exclusive License Agreements with RaQualia (as amended, the “RaQualia Agreements”) that granted the Company global rights, subject to certain exceptions for injectables in Japan, Korea, China and Taiwan for development and commercialization of licensed animal health products for compounds RQ-00000005 (ENTYCE®, also known as AT-002) and RQ-00000007 (GALLIPRANT®, also known as AT-001). The Company will be required to pay RaQualia remaining milestone payments associated with GALLIPRANT and ENTYCE of up to  $4,000 and $6,000, respectively, upon the Company’s achievement of certain development, regulatory and commercial milestones, as well as mid-single digit royalties on the Company’s or the Company’s sublicensee’s product sales.

The Company achieved a $3,000 milestone during the ninemonths ended September 30, 2017, whichwas paid and capitalized as an intangible asset in the first quarter of 2017. As of September 30, 2017, the Company had paid $8,500 in milestone paymentssince execution of the RaQualia Agreements. During the fourth quarter of 2017, the Company achieved an additional $3,000 milestone related to the RaQualia Agreements, which the Company anticipates will be paid in the fourth quarter of 2017. The Company does not anticipate that any additional milestones will be achieved in the next 12 months.

Elanco

GALLIPRANT

On April 22, 2016, the Company entered into a Collaboration, License, Development and Commercialization Agreement (as amended, the “Collaboration Agreement”) with Elanco pursuant to which the Company granted Elanco rights to develop, manufacture, market and commercialize the Company’s products based on licensed grapiprant rights and technology, including GALLIPRANT (collectively, “Grapiprant Products”). Pursuant to the Collaboration 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, the Company received a non-refundable, non-creditable upfront payment of $45,000.  The Company is entitled to a  $4,000 milestone paymentupon European approval of a  Grapiprant Productfor the treatment of pain and inflammation,  another$4,000payment upon achievement of a development milestone related to the manufacturing of a Grapiprant Product, and payments up to $75,000 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. The Company is responsible for all development activities required to obtain the first registration or regulatory approval for a Grapiprant Product for use in dogs in each of the European Union (“the EU Product Registration”) and the United States, and Elanco is responsible for all other development activities. First registration for a Grapiprant Product in the United States was achieved before the completion of the Collaboration Agreement.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 additional registration or regulatory approval of the Grapiprant Products, provided that the Company’s contribution to such development fees and expenses is capped at $7,000 (“R&D Cap”), which was recorded as licensing and collaboration commitment liability in the consolidated balance sheets at September 30, 2017 and December 31, 2016. The Company classified the licensing and collaboration commitment liability as a current liability due to the Company having no control over when R&D Cap expenses will be incurred and the expected timing of R&D Cap expenses being unknown as of September 30, 2017.The licensing and collaboration commitment liability will be reduced in future periods as the related expenses are incurred by Elanco and paid for by the Company. Any remaining balance not paid to Elanco will be recognized as licensing and collaboration revenue on December 31, 2018, when the Company’s obligation to fund 25% of Elanco’s development efforts expires.

Commencing on the effective date of the Collaboration Agreement, the Company is responsible for the manufacture and supply of all of Elanco’s reasonable requirements of active pharmaceutical ingredient (“API”) and/or finished Grapiprant Productsunder the supply terms agreed upon pursuant to the Collaboration Agreement. However, Elanco retains the ability to assume all or a portion of the manufacturing responsibility during the term of the Collaboration Agreement. On April 28, 2017, the Company and Elanco entered into an amendment (the “Amendment”) to the Collaboration Agreement. Under the Amendment, Elanco has agreed to submit binding purchase orders to the Company, within 15 days of the effective date of the Amendment, for certain finished Grapiprant Products to be produced from certain batches of API the Company has agreed to purchase from its third-party manufacturer (the “API Batches”). In addition, Elanco has agreed to pay the Company for the API Batches within 30 days after the Company provides Elanco with proof of payment to the manufacturer for such API Batches. The Amendment provides that, in the event Elanco provides notice of its intent to assume responsibility for manufacturing, Elanco would assume all responsibilities of the Company with respect to any undelivered API, including paying the third-party manufacturer for such undelivered API. In July 2017, pursuant to Sections 8.2.2 and 10.1(c) of the Collaboration Agreement, as amended, Elanco provided the Company notice of its intent to assume responsibility for manufacturing of the Grapiprant Products and its intent to assume the applicable regulatory approvals.

In September 2017, the Company and Elanco finalized the transfer of the applicable regulatory approvals in the United States and the responsibility for manufacturing of Grapiprant Products to Elanco. In connection with this assumption of manufacturing responsibility, Elanco agreed to compensate the Company $10,832 for certain Grapiprant Product inventories and manufacturing considerations. During the three months ended September 30, 2017, the Company recognized $1,000 of licensing and collaboration revenues and$67 of product sales, as well as$3,733 in reimbursement of previously incurred inventory costs, which is included in accounts receivable, net as of September 30, 2017, related to the assumption of manufacturing responsibility by Elanco. In addition, the Company believes all residual matters related to the assumption of manufacturing responsibility by Elanco and the sale of remaining GALLIPRANT inventories will be concluded in the fourth quarter of 2017. The Company anticipates it will recognize approximately$6,000 of remaining product sales related to the assumption of manufacturing responsibility by Elanco in the fourth quarter of 2017.  

On April 22, 2016, in connection with the Collaboration Agreement, the Company entered into a Co-Promotion Agreement (the “Co-Promotion Agreement”) with Elanco to co-promote Grapiprant Products in the United States.

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

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Common Stock

9 Months Ended

Sep. 30, 2017

Common Stock [Abstract]

Common Stock

10. Common Stock

As of September 30, 2017, there were 42,461,335 shares of the Company’s common stock outstanding, net of 540,464 shares of unvested restricted common stock.

At-the-Market Offering

On October 16, 2015, the Company entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital, Inc. (“Barclays”) pursuant to which the Company could sell from time to time, at its option, up to an aggregate of $52,000 of shares of its common stock (the “Shares”) through Barclays, as sales agent (“ATM Program”). Sales of the Shares were made under the Company’s previously filed and then effective registration statement on Form S-3 (Reg. No. 333-197414), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Sales Agreement, the Shares could be sold at market prices, at negotiated prices or at prices related to the prevailing market price. The Company paid Barclays a commission of 2.75% of the gross proceeds from the sale of the Shares.

On April 28, 2017, the Company terminated its Sales Agreement. Prior to termination, the Company sold approximately $18,000 of the $52,000 available to be sold under the Sales Agreement. The Company terminated the Sales Agreement because it did not intend to raise additional capital through the ATM Program, and no additional shares of the Company’s common stock were sold pursuant to the Sales Agreement. The Company did not incur any termination penalties as a result of its termination of the Sales Agreement.

Prior to the termination of the Sales Agreement, the Company sold 546,926 Shares for aggregate net proceeds of $2,788 in 2017.

Registered Direct Offering

On May 3, 2017, the Company entered into a Placement Agency Agreement (“PAA”) with Barclays, pursuant to which Barclays agreed to serve as placement agent for an offering of shares of common stock. In conjunction with the PAA, on May 3, 2017, the Company also entered into a Securities Purchase Agreement with certain investors for the sale by the Company of 5,000,000 shares of common stock at a purchase price of $5.25 per share (the “Offering”). The shares of common stock were offered and sold pursuant to the Company’spreviously filed and then effective registration statement on Form S-3 (File No. 333-197414) and a related prospectus supplement. The Company agreed to pay Barclays an aggregate fee equal to 6.0% of the gross proceeds received by the Company from the Offering. The Offering closed on May 9, 2017, andthe Company received aggregate net proceeds from the Offering of approximately $24,400, after deducting placement agent fees of $1,575 and offering expenses of $273.

Shelf Registration Statement

On August 4, 2017, the Company filed a shelf registration statement on Form S-3 (Reg. No. 333-219681) (the “Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”). The Shelf Registration Statement was declared effective by the SEC on August 16, 2017.

The Shelf Registration Statement allows the Company to offer and sell, from time to time, up to $100,000 of common stock, preferred stock, debt securities, warrants, units or any combination of the foregoing in one or more future public offerings. The terms of any future offering would be determined at the time of the offering and would be subject to market conditions and approval by the Company’s Board of Directors. Any offering of securities covered by the Shelf Registration Statement will be made only by means of a written prospectus and prospectus supplement authorized and filed by the Company.

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Stock-Based Awards

9 Months Ended

Sep. 30, 2017

Stock-Based Awards [Abstract]

Stock-Based Awards

11. Stock-Based Awards

2010 Equity Incentive Plan

Activity related to stock options under the 2010 Equity Incentive Plan (the “2010 Plan”) for the nine months ended September 30, 2017, was as follows:

				Weighted
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(In Years)
Outstanding as of December 31, 2016	65,931	$	3.73	6.09	$	228
Granted	—		—
Exercised	(8,537)		0.40
Forfeited	—		—
Expired	—		—
Outstanding as of September 30, 2017	57,394	$	4.22	5.36	$	110

No stock options have been granted under the 2010 Plan since the effective date of the 2013 Incentive Award Plan (the “2013 Plan”). For the nine months ended September 30, 2017, the total intrinsic value of options exercised was $53 and the total received from stock option exercises was $3.

2013 Incentive Award Plan

On January 1, 2017, the annual increase in the number of shares available for issuance under the 2013 Plan was determined to be 1,203,369 shares in accordance with the automatic annual increase provisions of the 2013 Plan. As of September 30, 2017, there were 1,598,005 shares available for future grant under the 2013 Plan.

Activity related to stock options under the 2013 Plan for the nine months ended September 30, 2017, was as follows:

				Weighed
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(in years)
Outstanding as of December 31, 2016	2,251,518	$	12.43	7.78	$	2,261
Granted	530,900		7.80
Exercised	(48,947)		3.14
Forfeited	(29,508)		11.23
Expired	(112,023)		18.96
Outstanding as of September 30, 2017	2,591,940	$	14.03	7.69	$	1,235

For the nine months ended September 30, 2017, the weighted average grant date fair value of stock options granted was $5.15. For the nine months ended September 30, 2017, the total intrinsic value of options exercised was $120 and the total received from stock option exercises was $154.

Activity related to restricted stock under the 2013 Plan for the nine months ended September 30, 2017, was as follows:

		Weighted
		Average Grant
	Shares	Date Fair Value
Unvested restricted common stock as of December 31, 2016	461,463	$	8.30
Issued	339,700		7.85
Vested	(249,907)		9.44
Forfeited	(10,792)		7.32
Unvested restricted common stock as of September 30, 2017	540,464	$	7.51

For the nine months ended September 30, 2017, the total fair value of restricted common stock vested was $1,810. The Company did not receive cash proceeds for any of the restricted common stock issued during the nine months ended September 30, 2017.

Stock-Based Compensation

Upon adoption of ASU 2016-09 (Compensation – Stock Compensation)  on January 1, 2017, the Company elected to change its accounting policy to account for forfeitures as they occur.The change was applied on a modified retrospective basis with a cumulative-effect adjustment to accumulated deficit of  $213 (which increased the accumulated deficit) as of January 1, 2017. Prior to adoption of this guidance the Company estimated forfeitures.

The Company recorded stock-based compensation expense related to stock options and restricted stock as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Cost of product sales and inventories	$	42	$	30	$	126	$	79
Research and development		229		227		717		856
Selling, general and administrative		1,528		1,831		4,614		5,601
	$	1,799	$	2,088	$	5,457	$	6,536

As of  September 30, 2017,  the Company had an aggregate of $5,595 and $3,021 of unrecognized stock-based compensation expense for options outstanding and restricted stock awards, respectively, which is expected to be recognized over a weighted average period of 2.29 years and 1.85years, respectively.

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Net Loss Per Share

9 Months Ended

Sep. 30, 2017

Net Loss Per Share [Abstract]

Net Loss Per Share

12. Net Loss Per Share

Basic and diluted net loss per share was calculated as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Numerator:
Net loss	$	(8,920)	$	(13,371)	$	(31,912)	$	(10,242)
Denominator:
Weighted average shares outstanding, basic and diluted		42,445,553		35,092,686		39,820,573		34,837,169
Net loss per share, basic and diluted	$	(0.21)	$	(0.38)	$	(0.80)	$	(0.29)

Stock options for the purchase of 2,649,334and 2,412,238 shares of common stock were excluded from the computation of diluted net loss per shareattributable to common stockholders for the three and ninemonths ended September 30, 2017 and 2016, respectively,  because those options had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the period.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Taxes [Abstract]

Income Taxes

13. Income Taxes

The Company recorded no income tax expense or benefit during the three and nine months ended September 30, 2017 and 2016, due to a full valuation allowance recognized against its deferred tax assets.

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2017

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

14. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of their related tax effects, were as follows:

	Foreign		Accumulated
	Currency		Other
	Translation		Comprehensive
	Adjustment		Loss
As of December 31, 2016	$	(9,862)	$	(9,862)
Foreign currency translation adjustment		2,522		2,522
As of September 30, 2017	$	(7,340)	$	(7,340)

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Legal Contingencies

9 Months Ended

Sep. 30, 2017

Legal Contingencies [Abstract]

Legal Contingencies

15.  Legal Contingencies

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business, including those related to patents, product liability and government investigations. Except as described below, the Company is not presently a party to any litigation which it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material effect on its financial statements. The Company accrues contingent liabilities when it is probable that a future liability has been incurred and such liability can be reasonably estimated.

In February 2017, two purported class action lawsuits were filed in the United States District Court for the Southern District of New York against the Company and two of its current officers. Those cases have been consolidated into one purported class action lawsuit under the caption, In re Aratana Therapeutics, Inc. Securities Litigation, Case No. 1:17-cv-00880. The consolidated lawsuit, which was amended in August 2017, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Company’s business, operations, prospects and performance during the proposed class period of March 16, 2015 to March 13, 2017. The Company intends to vigorously defend all claims asserted, including by filing a motion to dismiss. Given the early stage of the litigation, at this time a loss is not probable or reasonably estimable.

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Summary Of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2017

Summary Of Significant Accounting Policies [Abstract]

Business Overview

Business Overview

Aratana Therapeutics, Inc., including its subsidiaries (the “Company” or “Aratana”) was incorporated on December 1, 2010 under the laws of the State of Delaware. The Company is a pet therapeutics company focused on licensing, developing and commercializing innovative therapeutics for dogs and cats. The Company has one operating segment: pet therapeutics.

Basis Of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016 and the notes thereto in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2017. In the opinion of management, all adjustments, consisting of a normal and recurring nature, considered necessary for a fair presentation, have been included.

The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $217,718 as of September 30, 2017. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash, cash equivalents and short-term investments will be sufficient to fund operations and debt obligations for at least one year from the issuance of these consolidated financial statements.

The Company expects to continue to incur operating losses for the next several years as it works to develop and commercialize its therapeutics and therapeutic candidates. If the Company cannot generate sufficient cash from operations in the future, it may seek to fund its operations through collaborations and licensing arrangements, as well as public or private equity offerings or further debt (re)financings. If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to curtail its operations which could include delaying the commercial launch of its therapeutics, discontinuing therapeutic development programs, or granting rights to develop and market therapeutics or therapeutic candidates that it would otherwise prefer to develop and market itself. As disclosed in Note 7 to the consolidated financial statements, the Company has a term loan and a revolving credit facility with an aggregate principal  balance of $36,500 as of September 30, 2017. The loan agreement requires that the Company maintain certain minimum liquidity at all times(the greater of cash equal to fifty percent (50%) of outstanding balance or remaining months’ liquidity, which is calculated on an average trailing three (3) month basis, equal to six (6) months or greater), which as of September 30, 2017, was approximately $18,250. If the minimum liquidity covenant is not met, the Company may be required to repay the loans prior to their scheduled maturity dates. At September 30, 2017, the Company was in compliance with all financial covenants.

Consolidation

Consolidation

The Company’s consolidated financial statements include its financial statements and those of its wholly-owned subsidiaries and a consolidated variable interest entity (“VIE”)through the deconsolidation date in December 2016. Intercompany balances and transactions are eliminated in consolidation.

To determine if the Company holds a controlling financial interest in an entity, the Company first evaluates if it is required to apply the VIE model to the entity. Where the Company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives it the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company is the primary beneficiary of that VIE. When changes occur to the design of an entity, the Company reconsiders whether it is subject to the VIE model. The Company continuously evaluates whether it is the primary beneficiary of a consolidated VIE and upon determination that the Company no longer remains the primary beneficiary, the Company deconsolidates the entity and a gain or loss is recognized upon deconsolidation.

Use Of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates.

Property And Equipment, Net

Property and Equipment, net

Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1,615 and $920 as of September 30, 2017 and December 31, 2016, respectively.

New Accounting Standards

New Accounting Standards

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on recognizing revenue in contracts with customers. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This guidance will supersede the revenue recognition requirements in topic, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

In July 2015, the FASB approved a one-year delay in the effective date of the new revenue standard. These changes become effective for the Company on January 1, 2018. Early adoption is permitted but not before the original effective date of January 1, 2017. The standard permits the use of either the retrospective or modified retrospectiveadoption method. The Company is currently assessing the method of adoption and the impact this new guidance will have on its consolidated financial statements. The Company expects to adopt these standards using the modified retrospective method. The timing of revenue recognition for variable consideration under the Company’s licensing and collaboration agreements may be different as a result of this new guidance. The Company is reviewing its licensing and collaboration agreements for variable consideration, and if any such consideration exists, whether it should be estimated and recognized earlier than under the current revenue guidance. The Company is also assessing its product revenues under the revised guidance. To date, no material differences have been identified with respect to product revenues, however the Company’s assessment is ongoing, and the impact of adoption, if any, will depend on arrangements in place at the adoption date.

Inventory

In July 2015, the FASB issued guidance that requires entities to measure most inventory “at lower of cost and net realizable value” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a prospective basis. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Leases

In February 2016, the FASB issued guidance that requires, for operating leases, a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and is to be applied using a modified retrospective method. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

Compensation – Stock Compensation

In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for employee share-based payment transactions including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Intangibles—Goodwill and Other

In January 2017, the FASB issued guidance on simplifying the subsequent measurement of goodwill by eliminating Step 2 (measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill) from the goodwill impairment test. Under the amendments in this guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The guidance requires application using a prospective method. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material impact on its consolidated financial statements.

Compensation – Stock Compensation

In May 2017, the FASB issued guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. The Company is currently assessing the effect that adoption of this guidance will have on its consolidated financial statements.

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Fair Value Of Financial Assets And Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Of Financial Assets And Liabilities [Abstract]

Summary Of Information About Company's Financial Assets And Liabilities Subject To Fair Value Measurement On Recurring Basis

			Fair Value Measurements as of
	Carrying		September 30, 2017 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,470	$	—	$	7,470	$	—	$	7,470
Short-term investments:
Short-term marketable securities - certificates of deposit		1,494		—		1,494		—		1,494
	$	8,964	$	—	$	8,964	$	—	$	8,964

			Fair Value Measurements as of
	Carrying		December 31, 2016 Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Certificates of deposit	$	7,719	$	—	$	7,719	$	—	$	7,719
Short-term investments:
Short-term marketable securities - certificates of deposit		996		—		996		—		996
	$	8,715	$	—	$	8,715	$	—	$	8,715

Carrying Amounts And Estimated Fair Value Of Company's Financial Liabilities Not Measured At Fair Value On Recurring Basis

	September 30, 2017
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	36,847	$	36,847

	December 31, 2016
	Carrying Value		Fair Value
Liabilities:
Loans payable (Level 2)	$	40,188	$	40,709

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Investments (Tables)

9 Months Ended

Sep. 30, 2017

Investments [Abstract]

Fair Value Of Available-For-Sale Marketable Securities

Marketable securities consisted of the following:

	September 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	1,494	$	—	$	—	$	1,494
Total	$	1,494	$	—	$	—	$	1,494

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Losses		Losses		Value
Short-term marketable securities:
Certificates of deposit	$	996	$	—	$	—	$	996
Total	$	996	$	—	$	—	$	996

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Inventories (Tables)

9 Months Ended

Sep. 30, 2017

Inventories [Abstract]

Components Of Inventories

	September 30, 2017		December 31, 2016
Raw materials	$	1,485	$	1,441
Work-in-process		2,114		8,153
Finished goods		5,442		1,536
	$	9,041	$	11,130

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets [Abstract]

Summary Of Goodwill

	Gross		Impairment		Net
	Carrying Value		Losses		Carrying Value
Goodwill	$	41,023	$	—	$	41,023

Summary Of Change In The Net Book Value Of Goodwill

	2017
As of January 1,	$	39,382
Effect of foreign currency exchange		1,641
As of the end of the period,	$	41,023

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Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets [Abstract]

Summary Of Change In The Net Book Value Of Other Intangible Assets

	2017
As of January 1,	$	7,639
Additions (Note 9)		3,000
Amortization expense		(235)
Effect of foreign currency exchange		798
As of the end of the period,	$	11,202

Summary Of Unamortized Intangible Assets

	Net
	Carrying
	Value
Intellectual property rights acquired for in-process research and development	$	7,472

Summary Of Amortized Intangible Assets

	Gross				Net		Weighted
	Carrying		Accumulated		Carrying		Average
	Value		Amortization		Value		Useful Life
Intellectual property rights for currently marketed products	$	42,652	$	38,922	$	3,730	11.7	Years

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Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt [Abstract]

Schedule Of Loan Payable Balance

Principal amounts
Term loan, 7.91%, principal payments from February 1, 2018 through October 16, 2019	$	31,500
Revolving credit facility, 7.91%, principal payments from November 1, 2018 through October 16, 2019		5,000
Add: accretion of final payment and termination fees		724
Less: unamortized debt issuance costs		(377)
As of the end of the period	$	36,847

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2017

Accrued Expenses [Abstract]

Summary Of Accrued Expenses

	September 30, 2017		December 31, 2016
Accrued expenses:
Payroll and related expenses	$	1,933	$	2,321
Professional fees		244		219
Royalty expense		475		71
Interest expense		241		247
Research and development costs		429		364
Unbilled inventories		—		465
Accrued loss on a firm purchase commitment		—		1,983
Milestone		480		17
Other		153		140
Total	$	3,955	$	5,827

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Stock-Based Awards (Tables)

9 Months Ended

Sep. 30, 2017

Compensation Related Costs, Share-based Payments [Line Items]

Summary Of Stock-Based Compensation Expense Related To Stock Options And Restricted Stock

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Cost of product sales and inventories	$	42	$	30	$	126	$	79
Research and development		229		227		717		856
Selling, general and administrative		1,528		1,831		4,614		5,601
	$	1,799	$	2,088	$	5,457	$	6,536

2010 Equity Incentive Plan [Member]

Compensation Related Costs, Share-based Payments [Line Items]

Summary Of Stock Option Activity

				Weighted
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(In Years)
Outstanding as of December 31, 2016	65,931	$	3.73	6.09	$	228
Granted	—		—
Exercised	(8,537)		0.40
Forfeited	—		—
Expired	—		—
Outstanding as of September 30, 2017	57,394	$	4.22	5.36	$	110

2013 Equity Incentive Plan [Member]

Compensation Related Costs, Share-based Payments [Line Items]

Summary Of Stock Option Activity

				Weighed
	Shares	Weighted		Average
	Issuable	Average		Remaining	Aggregate
	Under	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
				(in years)
Outstanding as of December 31, 2016	2,251,518	$	12.43	7.78	$	2,261
Granted	530,900		7.80
Exercised	(48,947)		3.14
Forfeited	(29,508)		11.23
Expired	(112,023)		18.96
Outstanding as of September 30, 2017	2,591,940	$	14.03	7.69	$	1,235

Summary Of Restricted Stock Activity

		Weighted
		Average Grant
	Shares	Date Fair Value
Unvested restricted common stock as of December 31, 2016	461,463	$	8.30
Issued	339,700		7.85
Vested	(249,907)		9.44
Forfeited	(10,792)		7.32
Unvested restricted common stock as of September 30, 2017	540,464	$	7.51

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Net Loss Per Share [Abstract]

Schedule Of Basic And Diluted Net Loss Per Share Attributable To Common Stockholders

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Numerator:
Net loss	$	(8,920)	$	(13,371)	$	(31,912)	$	(10,242)
Denominator:
Weighted average shares outstanding, basic and diluted		42,445,553		35,092,686		39,820,573		34,837,169
Net loss per share, basic and diluted	$	(0.21)	$	(0.38)	$	(0.80)	$	(0.29)

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2017

Accumulated Other Comprehensive Loss [Abstract]

Summary Of Changes In Accumulated Other Comprehensive Loss

	Foreign		Accumulated
	Currency		Other
	Translation		Comprehensive
	Adjustment		Loss
As of December 31, 2016	$	(9,862)	$	(9,862)
Foreign currency translation adjustment		2,522		2,522
As of September 30, 2017	$	(7,340)	$	(7,340)

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Summary Of Significant Accounting Policies (Narrative) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) segment	Dec. 31, 2016 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of operating segments | segment	1
Accumulated deficit	$ 217,718	$ 185,593
Accumulated depreciation and amortization	1,615	$ 920
Term Loan And Revolving Credit Facility [Member]
Summary Of Significant Accounting Policies [Line Items]
Principal amount of debt	36,500
Term Loan [Member]
Summary Of Significant Accounting Policies [Line Items]
Principal amount of debt	$ 31,500
Minimum liquidity requirement	50.00%
Liquidity requirement	$ 18,250

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Fair Value Of Financial Assets And Liabilities (Summary Of Information About Company's Financial Assets And Liabilities Subject To Fair Value Measurement On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets:
Assets, fair value	$ 8,964	$ 8,715
Carrying Value [Member]
Assets:
Assets, fair value	8,964	8,715
Certificates of Deposit [Member]
Assets:
Cash equivalents	7,470	7,719
Certificates of Deposit [Member] | Carrying Value [Member]
Assets:
Cash equivalents	7,470	7,719
Short-Term Marketable Securities - Certificates Of Deposit [Member]
Assets:
Short-term marketable securities - certificates of deposit	1,494	996
Short-Term Marketable Securities - Certificates Of Deposit [Member] | Carrying Value [Member]
Assets:
Short-term marketable securities - certificates of deposit	1,494	996
Level 2 [Member]
Assets:
Assets, fair value	8,964	8,715
Level 2 [Member] | Certificates of Deposit [Member]
Assets:
Cash equivalents	7,470	7,719
Level 2 [Member] | Short-Term Marketable Securities - Certificates Of Deposit [Member]
Assets:
Short-term marketable securities - certificates of deposit	$ 1,494	$ 996

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Fair Value Of Financial Assets And Liabilities (Carrying Amounts And Estimated Fair Value Of Company's Financial Liabilities Not Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loan payable, Carrying Value	$ 36,847
Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loan payable, Carrying Value	36,847	$ 40,188
Loan payable, Fair Value	$ 36,847	$ 40,709

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Investments (Fair Value Of Available-For-Sale Marketable Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,494	$ 996
Fair Value	1,494	996
Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,494	996
Fair Value	$ 1,494	$ 996

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Inventories (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Inventory [Line Items]
Deposits for inventory	$ 1,839		$ 1,839		$ 2,022
Raw materials	1,485		1,485		1,441
Finished goods	5,442		5,442		1,536
Inventory valuation adjustment losses	342		394	$ 1,552
GALLIPRANT, ENTYCE and NOCITA [Member]
Inventory [Line Items]
Non-cancellable open orders	10,333		10,333		$ 17,800
AT-001 GALLIPRANT [Member]
Inventory [Line Items]
Raw materials	1,124		1,124
Finished goods	$ 5,343		$ 5,343
BLONTRESS, TACTRESS and GALLIPRANT [Member]
Inventory [Line Items]
Inventory valuation adjustment losses		$ 111		$ 1,664

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Inventories (Components Of Inventories) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventories [Abstract]
Raw materials	$ 1,485	$ 1,441
Work-in-process	2,114	8,153
Finished goods	5,442	1,536
Total	$ 9,041	$ 11,130

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Goodwill (Narrative) (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Goodwill And Intangible Assets [Abstract]
Goodwill impairment loss	$ 0	$ 0

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Goodwill (Summary Of Goodwill) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Goodwill And Intangible Assets [Abstract]
Gross Carrying Value	$ 41,023
Impairment Losses
Net Carrying Value	$ 41,023	$ 39,382

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Goodwill (Summary Of Change In The Net Book Value Of Goodwill) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Goodwill And Intangible Assets [Abstract]
As of January 1,	$ 39,382
Effect of foreign currency exchange	1,641
As of the end of the period,	$ 41,023

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Intangible Assets, Net (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Intangible Assets [Line Items]
Amortization of intangible assets	$ 85	$ 91	$ 235	$ 281
Impairment charges, indefinite-lived			34,575
Intellectual Property Rights Acquired For In-Process Research And Development [Member]
Intangible Assets [Line Items]
Impairment charges, indefinite-lived			$ 16,765

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Intangible Assets, Net (Summary Of Change In The Net Book Value Of Other Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Goodwill And Intangible Assets [Abstract]
As of January 1			$ 7,639
Additions (Note 9)			3,000
Amortization expense	$ (85)	$ (91)	(235)	$ (281)
Effect of foreign currency exchange			798
As of the end of the period,	$ 11,202		$ 11,202

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Intangible Assets, Net (Summary Of Unamortized Intangible Assets) (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Intellectual Property Rights Acquired For In-Process Research And Development [Member]
Indefinite-lived Intangible Assets [Line Items]
Net Carrying Value	$ 7,472

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Intangible Assets, Net (Summary Of Amortized Intangible Assets) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Net carrying value	$ 11,202	$ 7,639
Intellectual Property Rights For Currently Marketed Products [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	42,652
Accumulated amortization	38,922
Net carrying value	$ 3,730
Weighted average useful life	11 years 8 months 12 days

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Debt (Narrative) (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended
	Oct. 17, 2017	Jul. 31, 2017	Oct. 16, 2015	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Debt Instrument [Line Items]
Interest expense				$ 870	$ 851	$ 2,601	$ 2,538
Current portion – loans payable				12,156		12,156		$ 14,413
Term Loan [Member]
Debt Instrument [Line Items]
Amount outstanding				$ 31,500		$ 31,500
Interest rate				7.91%		7.91%
Date of maturity						Oct. 16, 2019
Interest only payment term						18 months
Principal and accrued interest payment term						30 months
Minimum liquidity requirement						50.00%
Liquidity requirement				$ 18,250		$ 18,250
Current portion – loans payable				12,000		12,000
Revolving Line [Member]
Debt Instrument [Line Items]
Amount outstanding				$ 5,000		$ 5,000
Interest rate				7.91%		7.91%
Date of maturity						Oct. 16, 2017
Termination fee				$ 165		$ 165
Current portion – loans payable				$ 156		$ 156
Revolving Line [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Termination fee paid	$ 165
Term Loan And Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Interest rate			6.91%	7.91%		7.91%
Excess interest rate over prime rate			3.66%
Loan Agreement, Second Amendment [Member]
Debt Instrument [Line Items]
Date of maturity						Oct. 16, 2019
Additional default interest rate				4.00%		4.00%
Interest only payment term		6 months
Minimum liquidity requirement						50.00%
Liquidity requirement				$ 18,250		$ 18,250
Amendment fee		$ 150
Facility fee		60
Termination fee		$ 165

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Debt (Schedule Of Loan Payable Balance) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Add: accretion of final payment and termination fees	$ 724
Less: unamortized debt issuance costs	(377)
Total	36,847
Term Loan [Member]
Principal amounts	$ 31,500
Interest rate	7.91%
Date of first principal payment	Feb. 01, 2018
Date of maturity	Oct. 16, 2019
Revolving Line [Member]
Principal amounts	$ 5,000
Interest rate	7.91%
Date of first principal payment	Nov. 01, 2018
Date of maturity	Oct. 16, 2017

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Accrued Expenses (Summary Of Accrued Expenses) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accrued expenses:
Payroll and related expenses	$ 1,933	$ 2,321
Professional fees	244	219
Royalty expense	475	71
Interest expense	241	247
Research and development costs	429	364
Unbilled inventories		465
Accrued loss on a firm purchase commitment		1,983
Milestone	480	17
Other	153	140
Total	$ 3,955	$ 5,827

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Agreements (RaQualia Pharma Inc Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 27, 2010 USD ($) agreement
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Intangible assets acquired			$ 3,000,000
Research and development	$ 3,220,000	$ 5,334,000	11,574,000	$ 21,386,000
RaQualia Agreements [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Number of license agreements | agreement							2
Intangible assets acquired			3,000,000
Milestones paid			$ 8,500,000
RaQualia Agreements [Member] | Scenario, Forecast [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestones payable					$ 0	$ 3,000,000
AT-001 GALLIPRANT [Member] | RaQualia Agreements [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestones payable							$ 4,000,000
AT-002 ENTYCE [Member] | RaQualia Agreements [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestones payable							$ 6,000,000

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Agreements (Elanco GALLIPRANT Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
	Apr. 28, 2017	Dec. 31, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Research and development			$ 3,220	$ 5,334	$ 11,574	$ 21,386
Other long-term assets			506		506		$ 545
Licensing and collaboration revenue			2,192		3,899	38,151
Product sales			3,971	$ 40	11,217	$ 108
Elanco Collaboration Agreement [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Non-refundable, non-creditable up-front payment receivable			45,000		$ 45,000
Percentage of third-party development fees and expenses to be paid					25.00%
Elanco Collaboration Agreement [Member] | Maximum [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Research and development					$ 7,000
Elanco Collaboration Agreement [Member] | Elanco Animal Health, Inc. [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Percentage of third-party development fees and expenses to be paid					75.00%
Elanco Co-Promotion Agreement [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Fee for services performed and expenses incurred as a percent of gross margin to net sales					25.00%
Elanco Collaboration Agreement Amendment [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Contingent consideration			10,832		$ 10,832
Licensing and collaboration revenue			1,000
Product sales			67
Reimbursement of previously incurred inventory costs			3,733
Elanco Collaboration Agreement Amendment [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Binding purchase order, submission period	15 days
Agreement to pay after proof of payment to manufacturer, period	30 days
European Approval Milestone [Member] | Elanco Collaboration Agreement [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestone receivable			4,000		4,000
Manufacturing Milestone [Member] | Elanco Collaboration Agreement [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestone receivable			4,000		4,000
Sales Milestone [Member] | Elanco Collaboration Agreement [Member] | Grapiprant Products [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestone receivable			$ 75,000		$ 75,000
Reduction for each annual occurrence milestone is not achieved					33.33%
Scenario, Forecast [Member] | Elanco Collaboration Agreement Amendment [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Product sales		$ 6,000

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Common Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands				9 Months Ended
	May 03, 2017	Apr. 28, 2017	Oct. 16, 2015	Sep. 30, 2017	Aug. 04, 2017	Dec. 31, 2016
Class of Stock [Line Items]
Common stock outstanding, shares				42,461,335		36,607,922
Aggregate common stock available to sell		$ 52,000	$ 52,000
Percentage of commission on gross proceeds from sale of shares			2.75%
Shares sold				546,926
Proceeds from shares sold under sales agreement		$ 18,000		$ 2,788
Amount of common stock, preferred stock, debt securities, warrants, units or any combination available in future public offerings					$ 100,000
Securities Purchase Agreement [Member]
Class of Stock [Line Items]
Issuance of common stock, shares	5,000,000
Share issue price per share	$ 5.25
Stock offering close date	May 09, 2017
Agent fee, percentage of gross proceeds	6.00%
Net proceeds from offering	$ 24,400
Placement agent fee	1,575
Offering expenses	$ 273
Unvested Restricted Stock [Member]
Class of Stock [Line Items]
Common stock outstanding, shares				540,464

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Stock-Based Awards (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended		57 Months Ended
	Jan. 01, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from stock option exercises		$ 157	$ 54
Accumulated deficit		217,718		$ 217,718	$ 185,593
Accounting Standards Update 2016-09 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accumulated deficit	$ 213
2010 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options exercised		53
Proceeds from stock option exercises		$ 3
2010 Equity Incentive Plan [Member] | Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted				0
2013 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase in shares	1,203,369
Shares available for future grant		1,598,005		1,598,005
Unrecognized stock-based compensation expense for options outstanding		$ 5,595		$ 5,595
Stock options granted		530,900
Restricted stock granted		339,700
Weighted average grant date fair value, grants		$ 7.85
Unvested, other than options		540,464		540,464	461,463
Unrecognized stock-based compensation expense, other than options		$ 3,021		$ 3,021
2013 Equity Incentive Plan [Member] | Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value of options granted		$ 5.15
Aggregate intrinsic value of options exercised		$ 120
Proceeds from stock option exercises		$ 154
Unrecognized stock-based compensation expense, recognition period		2 years 3 months 15 days
2013 Equity Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value stock awards, vested, other than options		$ 1,810
Proceeds from the issuance of restricted stock		$ 0
Unrecognized stock-based compensation expense, recognition period		1 year 10 months 6 days

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Stock-Based Awards (Summary Of Stock Option Activity) (Details) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares
2010 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Issuable Under Options, Outstanding as of December 31, 2016 | shares	65,931
Shares Issuable Under Options, Exercised | shares	(8,537)
Shares Issuable Under Options, Outstanding as of September 30, 2017 | shares	57,394	65,931
Weighted Average Exercise Price, Outstanding as of December 31, 2016 | $ / shares	$ 3.73
Weighted Average Exercise Price, Exercised | $ / shares	0.40
Weighted Average Exercise Price, Outstanding as of September 30, 2017 | $ / shares	$ 4.22	$ 3.73
Weighted Average Remaining Contractual Term, Outstanding	5 years 4 months 10 days	6 years 1 month 2 days
Aggregate Intrinsic Value, Outstanding | $	$ 110	$ 228
2013 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Issuable Under Options, Outstanding as of December 31, 2016 | shares	2,251,518
Shares Issuable Under Options, Granted | shares	530,900
Shares Issuable Under Options, Exercised | shares	(48,947)
Shares Issuable Under Options, Forfeited | shares	(29,508)
Shares Issuable Under Options, Expired | shares	(112,023)
Shares Issuable Under Options, Outstanding as of September 30, 2017 | shares	2,591,940	2,251,518
Weighted Average Exercise Price, Outstanding as of December 31, 2016 | $ / shares	$ 12.43
Weighted Average Exercise Price, Granted | $ / shares	7.80
Weighted Average Exercise Price, Exercised | $ / shares	3.14
Weighted Average Exercise Price, Forfeited | $ / shares	11.23
Weighted Average Exercise Price, Expired | $ / shares	18.96
Weighted Average Exercise Price, Outstanding as of September 30, 2017 | $ / shares	$ 14.03	$ 12.43
Weighted Average Remaining Contractual Term, Outstanding	7 years 8 months 9 days	7 years 9 months 11 days
Aggregate Intrinsic Value, Outstanding | $	$ 1,235	$ 2,261

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Stock-Based Awards (Summary Of Restricted Stock Activity) (Details) - 2013 Equity Incentive Plan [Member]	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted common stock as of December 31, 2016, Share | shares	461,463
Issued, Shares | shares	339,700
Vested, Shares | shares	(249,907)
Forfeited, Shares | shares	(10,792)
Unvested restricted common stock as of September 30, 2017, Shares | shares	540,464
Unvested restricted common stock as of December 31, 2016, Weighted Average Grant Date Fair Value | $ / shares	$ 8.30
Issued, Weighted Average Grant Date Fair Value | $ / shares	7.85
Vested, Weighted Average Grant Date Fair Value | $ / shares	9.44
Forfeited, Weighted Average Grant Date Fair Value | $ / shares	7.32
Unvested restricted common stock as of September 30, 2017, Weighted Average Grant Date Fair Value | $ / shares	$ 7.51

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Stock-Based Awards (Summary Of Stock-Based Compensation Expense Related To Stock Options And Restricted Stock) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,799	$ 2,088	$ 5,457	$ 6,536
Research and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	229	227	717	856
Cost of Product Sales and Inventories [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	42	30	126	79
Selling, General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,528	$ 1,831	$ 4,614	$ 5,601

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Net Loss Per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock Options [Member]
Dilutive Securities Included And Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock excluded from diluted net loss per share	2,649,334	2,412,238	2,649,334	2,412,238

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Net Loss Per Share (Schedule Of Basic And Diluted Net Loss Per Share Attributable To Common Stockholders) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Net loss	$ (8,920)	$ (13,371)	$ (31,912)	$ (10,242)
Denominator:
Weighted average shares outstanding, basic and diluted	42,445,553	35,092,686	39,820,573	34,837,169
Net loss per share, basic and diluted	$ (0.21)	$ (0.38)	$ (0.80)	$ (0.29)

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Taxes [Abstract]
Income tax benefit	$ 0	$ 0	$ 0	$ 0

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Accumulated Other Comprehensive Loss (Summary Of Changes In Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
As of December 31, 2016			$ (9,862)
Foreign currency translation adjustment	$ 801	$ 418	2,522	$ 891
As of June 30, 2017	(7,340)		(7,340)
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
As of December 31, 2016			(9,862)
Foreign currency translation adjustment			2,522
As of June 30, 2017	$ (7,340)		$ (7,340)

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Legal Contingencies (Narrative) (Details) - Purported Class Action Lawsuit [Member]	1 Months Ended
	Feb. 28, 2017 lawsuit item
Commitments And Contingencies [Line Items]
Number of lawsuits	2
Number of lawsuits after consolidation	1
Officers [Member]
Commitments And Contingencies [Line Items]
Number of individuals named | item	2