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Why Is Aerie (AERI) Up 10% Since the Last Earnings Report?

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It has been more than a month since the last earnings report for Aerie Pharmaceuticals, Inc. (AERI - Free Report) . Shares have added about 10% in that time frame, outperforming the market.

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

Aerie Reports Narrower-Than-Expected Loss in Q2

Aerie posted second-quarter 2017 loss of $0.82 per share (including stock-based compensation), narrower than the Zacks Consensus Estimate of a loss of $0.84 and the year-ago loss of $0.87.

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

Quarter in Detail

In the reported quarter, research and development expenses declined 20.3% to $10.6 million as the company completed trials in the U.S. General and administrative expenses increased 82.7% to $17.1 million. The higher operating expenses in the quarter were attributed to expansion of the employee base to support operations and commercialization preparatory activities, including commercial manufacturing costs for Rhopressa.

Pipeline Updates

On Feb 28, the company resubmitted a new drug application (NDA) for lead candidate Rhopressa 0.02% and expects a review period of 12 months. We note that Aerie withdrew the Rhopressa NDA filed in September as a third party manufacturing facility in Tampa, FL was not ready for pre-approval inspection by the FDA. The company initiated preparations to bring a second contract manufacturer online in 2018.

Apart from Rhopressa, Aerie is evaluating Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Pfizer Inc.’s Xalatan. The company reported positive top-line 90-day efficacy and safety data from the second phase III clinical trial, Mercury 2. 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 early 2018.

The company also expects to commence a trial, Mercury 3, in the third-quarter of 2017, in Europe to support filings there. The trial will be a non-inferiority trial comparing Roclatan to prescribed fixed dose combination of Ganfort (a combination of the bimatoprost along with timolol), marketed by Allergan plc in Europe.

Meanwhile, the company recently inked a collaboration agreement with DSM with primary focus on the potential of Aerie compounds to treat retinal diseases.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Aerie's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.


Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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