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Aerie Pharmaceuticals (AERI) Up 16.7% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Aerie Pharmaceuticals, Inc. (AERI - Free Report) . Shares have added about 16.7% in that time frame.

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

Aerie Incurs Lower Loss in Q1, Launches Rhopressa  

Aerie reported first-quarter 2018 loss of $0.83 per share, narrower than the Zacks Consensus Estimate of a loss of $0.89 and the year-ago loss of $0.62.

Quarter in Detail

In December 2017, Aerie's lead drug Rhopressa was approved by the FDA for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. This approval came two months ahead of the scheduled Prescription Drug User Fee Act date of Feb 28, 2018. The launch is underway.

In the reported quarter, research and development expenses increased 10.6% to $10.9 million. Selling, general and administrative expenses surged to $21.1 million from $10.7 million in the year-ago quarter.

Also, higher operating expenses in the first quarter of 2018 as compared to the first quarter of  2017 is primarily due to increased activities associated with the expansion of the employee base to support the growth of operations, and preparatory activities associated with Rhopressa commercialization efforts.

Aerie is securing formulary contracts to enable commercial coverage in 2018 and Medicare Part D coverage in 2019. The company expects preferred formulary coverage for the majority of commercial plans by the end of 2018, and preferred formulary coverage for the majority of Medicare Part D plans commencing in 2019.

Pipeline Updates

Aerie is currently evaluating its second candidate, Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Xalatan. The NDA for Roclatan is expected to be filed in second-quarter 2018.  The company initiated a phase III trial, Mercury 3, in the third quarter of 2017 to prepare for regulatory submission in Europe. The trial is a non-inferiority trial comparing Roclatan with prescribed fixed dose combination of Ganfort.

Meanwhile, pre-IND activities are well underway for the further development of Aerie’s retina program candidates, including AR-13503 (Rho kinase and Protein kinase C inhibitor implant) and AR-1105 (dexamethasone steroid implant).

Outlook

Aerie expects Rhopressa revenues in the range of $20-$30 million in 2018. Total cash burn is projected in the range of $200-$210 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

At this time, AERI has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was also allocated a grade of F on the value side, putting it in the bottom 20% quintile 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.

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

Outlook

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




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