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Aerie (AERI) Q1 Earnings Beat, Rhopressa Misses Estimates

Zacks Equity Research

Shares of Aerie Pharmaceuticals, Inc. AERI are trading down 5.4% after the company reported mixed results for the first quarter. The company reported a loss of 78 cents in the first-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 91 cents and the year ago loss of 83 cents.

Aerie’s stock has gained 6% in the year so far compared with the industry’s growth of 8.3%.

 

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 2018.

Rhopressa’s revenues came in at $10.9 million in the quarter, missing the Zacks Consensus Estimate of $12.7 million.

Quarter in Detail

Rhopressa revenues reflect a higher proportion of Medicare Part D rebates which are steeper than commercial rebates.

In the reported quarter, research and development expenses increased to $17.9 million from $13 million in the year-ago quarter. Selling, general and administrative expenses surged to $36.3 million from $22.9 million in the year-ago quarter.

Rhopressa now has preferred brand Tier 2 market access for approximately 75% of lives covered under Medicare Part D plans. Rhopressa also has approximately 90% of lives covered under commercial plans, including 55% in preferred brand Tier 2 and 35% in Tier 3.

Pipeline Updates

In Mar 2019, Aerie announced that the FDA has approved Rocklatan 0.02%/0.005% to reduce elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension. Rocklatan is a once-daily, quadruple-action fixed-dose combination of Rhopressa (netarsudil) and Pfizer’s PFE Xalatan (latanoprost).

A phase III trial, Mercury 3, on Rocklatan continues to progress in Europe.

Aerie’s retina program - AR-13503 (Rho kinase and Protein kinase C inhibitor implant) and AR-1105 (dexamethasone steroid implant) continues to advance as well. The IND (Investigational New Drug application) for AR-13503 (Rho kinase and Protein kinase C inhibitor implant) was accepted by the FDA  last month. Clinical trials are expected to begin in the second quarter of 2019 for wet age-related macular degeneration and DME (diabetic macular edema).

In March 2019, a phase II study was initiated on AR-1105 for macular edema due to RVO (retinal vein occlusion). Safety and efficacy data for AR-1105 will be evaluated at six months after dosing.

2019 Guidance

Aerie reiterated its annual guidance. The company expects full-year 2019 net revenues in the range of $110 million to $120 million.

Our Take

Aerie reported mixed results for the fourth quarter. Rhopressa sales miss estimates due to higher rebates. Nevertheless, the approval of second drug, Rocklatan is a big boost for the company and should propel sales in the coming quarters even though competition is stiff from the likes of Bausch Health's BHC Vyzulta, among others.

Zacks Rank & Another Key Pick

Aerie currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is Bristol-Myers Squibb BMY , which sports a Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bristol-Myers’ earnings per share estimates have increased from $4.76 to $4.93 for 2020 in the past 60 days.

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