Aerie (AERI) Q4 Earnings Miss, Rhopressa Gains Traction

Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) reported a loss of $1.14 per share in fourth-quarter 2018, wider than the Zacks Consensus Estimate of a loss of $1.02 but narrower than the year-ago loss of $1.60.

Aerie’s shares have lost 4.5% in the past three months.

In December 2017, Rhopressa was approved by the FDA for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. The drug was launched by the end of April.

Rhopressa’s revenues came in at $14.5 million, beating the Zacks Consensus Estimate of $12.86 million.

Quarter in Detail

In the reported quarter, research and development expenses came down to $26.5 million from $38.1 million in the year-ago quarter. Selling, general and administrative expenses surged to $31.9 million from $18.5 million in the year-ago quarter.

As of Feb 25, 2019, Rhopressa’s market access increased to approximately 90% of commercial lives, including 55% in preferred brand Tier 2 and 35% in Tier 3, and Medicare Part D Tier 2 coverage currently represents approximately 40% of Medicare Part D lives. Aerie expects Medicare Part D Tier 2 equivalent coverage to increase to more than 70% within the next few weeks.

2018 Results

Total Rhopressa revenues in 2018 came in at $24.2 million, which beat the Zacks Consenus Estimate of $22.4 million. Loss per share came in at $5.58, wider than the Zacks Consensus Estimate of $4.72.

Pipeline Updates

Aerie’s New Drug Application (NDA) for its second product candidate, Rocklatan (netarsudil/latanoprost ophthalmic solution) 0.02%/0.005%, which is a fixed-dose combination of Rhopressa and Pfizer’s (NYSE:PFE) Xalatan, was submitted to the FDA in May 2018. The agency has completed its initial 60-day review of the NDA and determined that the application is sufficiently complete to permit a substantive review. The PDUFA (Prescription Drug User Fee Act) goal date for completion of the FDA’s review of the Rocklatan NDA is set for Mar 14, 2019.

Early October 2018, the European Medicines Agency (EMA) accepted for review the Marketing Authorisation Application (MAA) for Rhokiinsa (marketed as Rhopressa in the United States). An opinion on approval is expected in the second half of 2019.

The company had earlier initiated a phase III trial, Mercury 3, to prepare for a regulatory submission in Europe.

Pre-IND activities are well underway for further development of Aerie’s retina program candidates — AR-13503 (Rho kinase and Protein kinase C inhibitor implant) and AR-1105 (dexamethasone steroid implant). Trials on AR-1105 are expected to begin in March 2019 for RVO (retinal vein occlusion).

The IND (Investigational New Drug application) for AR-13503 (Rho kinase and Protein kinase C inhibitor implant) is expected to be filed with the FDA in March 2019, and, if accepted, trials are expected to begin in the second quarter of 2019 for wet age-related macular degeneration and DME (diabetic macular edema).

Our Take

Aerie reported mixed results for the fourth quarter. Though earnings missed estimates, Rhopressa sales comfortably beat estimates and doubled sequentially. The solid uptake in prescription volumes should propel sales further, as glaucoma is one of the largest segments in the global ophthalmic market, even though competition is stiff from the likes of Bausch Health's (BHC) Vyzulta, among others.

Finally, a tentative approval of Rocklatan (expected next monyth) will further boost prospects of the company.

Zacks Rank & Another Key Pick

Aerie currently carries a Zacks Rank #2 (Buy).

Another attractive stock in the healthcare sector is Celgene Corporation (NASDAQ:CELG) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings per share estimates increased from $10.37 to $10.75 for 2019 over the past 30 days. Estimates for 2020 also increased 35 cents.

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