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Aerie (AERI) Improves 22% YTD: Is Momentum Likely to Sustain?

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Shares of Aerie Pharmaceuticals, Inc. have rallied 22.4% in the year so far, outperforming 15.3% growth registered by the industry.

The FDA recently approved Aerie’s second drug, Rocklatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Xalatan (latanoprost), to reduce elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension. The company’s new drug application (NDA) for Rocklatan 0.02%/0.005% was submitted to the FDA in May 2018. The company plans to launch the drug in the United States in the second quarter of 2019. The approval further boosted Aerie’s portfolio.

Rhopressa, Aerie’s first drug, is already approved for lowering elevated IOP in patients with open-angle glaucoma or ocular hypertension. The drug was approved in 2017 and the initial uptake has been encouraging. As of February 2019, Rhopressa’s market access increased to approximately 90% of commercial lives, including 55% in preferred brand Tier 2 and 35% in Tier 3.

Aerie expects Medicare Part D Tier 2 equivalent coverage to increase to more than 70% within the next few weeks. In October 2018, the European Medicines Agency (EMA) accepted for review the Marketing Authorisation Application (MAA) for Rhokiinsa.  An opinion on approval is expected by the second half of 2019.

Glaucoma is one of the largest segments in the global ophthalmic market, and hence we expect Aerie to maintain momentum in the coming months.

The company is making efforts to further develop its portfolio. Earlier in the month, Aerie initiated patient dosing in its phase II study, designed in accordance with the requirements of Japan’s PMDA (Pharmaceuticals and Medical Devices Agency) to support potential regulatory submission of netarsudil ophthalmic solution (known as Rhropressa) in Japan.

The company also initiated patient dosing in a phase II clinical trial on AR-1105, its experimental dexamethasone intravitreal implant, in patients with macular edema caused by retinal vein occlusion (RVO).

As the glaucoma market holds potential, Aerie faces stiff competition from established branded and generic pharmaceutical companies, including Novartis (NVS - Free Report) for Simbrinza and Travtan, Allergan for Lumigan, and other smaller biotechnology and pharmaceutical companies. Bausch Health Companies’ (BHC - Free Report) Vyzulta is also approved for the treatment of patients suffering from open-angle glaucoma or ocular hypertension.

Zacks Rank

Aerie currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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