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Aerie (AERI) Q4 Loss Widens, Rhopressa NDA Resubmitted

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Aerie Pharmaceuticals, Inc. (AERI - Free Report) posted fourth-quarter 2016 loss of 87 cents per share (including stock-based compensation), wider than both the Zacks Consensus Estimate of a loss of 65 cents and the year-ago loss of 76 cents.

Being a development-stage company, Aerie has not generated any revenues from product sales yet.

We note that Aerie has outperformed the Zacks classified Medical Drugs industry in the last three months. In fact, the stock has gained 34.3% during this period, compared with a gain of 6.9% for the industry

Quarter in Detail

In the reported quarter, research and development expenses were up 14.5% to $14.1 million. Adjusted general and administrative expenses escalated 91.7% to $14.7 million.

The higher operating expenses in the reported quarter were due to expansion of the employee base to support clinical activities and preparatory activities associated with commercialization efforts.

Pipeline Update

The company resubmitted its NDA for lead candidate Rhopressa 0.02% on Feb 28 and expects a review period of 12 months. We note that Aerie withdrew its Rhopressa NDA (new drug application) that was filed in September as a third party manufacturing facility in Tampa, FL was not ready for pre-approval inspection by the FDA.

The company expects topline six-month efficacy and safety data from the phase III trial, Rocket 4, on Rhopressa in second-quarter 2017. The trial is being conducted to provide adequate safety data for European regulatory filings.

Apart from Rhopressa, Aerie is evaluating Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Pfizer’s (PFE - Free Report) Xalatan. The company expects topline 90-day efficacy and safety data from the second phase III clinical trial, Mercury 2, for Roclatan 0.02%/0.005%, in second-quarter 2017. Data from Mercury 1 is expected in third-quarter 2017. If Mercury 1 and Mercury 2 are successful, the NDA for Roclatan is expected to be filed in late 2017 or early 2018. 

The company also expects to commence a trial, Mercury 3, in Europe to support filings there. The trial will be a non-inferiority trial comparing Roclatan to prescribed fixed dose combination that is Ganfort (a combination of the bimatoprost along with timolol), marketed by Allergan (AGN - Free Report) in Europe.

In September, Aerie reported the successful 90-day primary efficacy results of its phase III Mercury 1 clinical trial for its fixed-dose combination product candidate, Roclatan which is being developed for IOP in patients with glaucoma or ocular hypertension.

Our Take

The wider-than-expected loss in the fourth quarter was disappointing.

Nevertheless, we are encouraged by the company's efforts in developing its pipeline candidates. With a number of upcoming data readouts lined up for the upcoming quarters, we expect investors to remain focused on further updates by the company.

Zacks Rank & Key Pick

Aerie currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is GlaxoSmithKline plc (GSK - Free Report) which currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GlaxoSmithKline’s earnings estimates increased from $2.66 to $2.76 for 2017 and from $2.80 to $2.85 for 2018 over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 11.03%.

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