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Aerie (AERI) Down 2.9% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Aerie Pharmaceuticals (AERI). Shares have lost about 2.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Aerie due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Aerie Q4 Earnings Miss, Rhopressa Gains Traction

Aerie 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.

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 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).

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Aerie has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Aerie has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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