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Aerie (AERI) Q3 Loss Wider than Expected, Pipeline in Focus

Zacks Equity Research

Aerie Pharmaceuticals, Inc.AERI posted third-quarter 2016 loss of 81 cents per share (including stock-based compensation), wider than both the Zacks Consensus Estimate of a loss of 70 cents and the year-ago loss of 69 cents.


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

Quarter in Detail

In the reported quarter, research and development expenses were up 28% to $12.7 million. Adjusted general and administrative expenses escalated 42.4% to $10.6 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.

In Sep 2016, Aerie announced that it raised total gross proceeds of $125 million through an underwritten public offering of shares.

Pipeline Update

In late October, the company announced positive 90-day topline efficacy results of the phase III Rocket 4 study for its lead pipeline candidate Rhopressa. Rhopressa is a once-daily formulation for lowering intraocular pressure (IOP) in patients suffering from open-angle glaucoma and ocular hypertension.

The study was required to be conducted to provide adequate six-month safety data for European regulatory filing. The study demonstrated non-inferiority of once-daily Rhopressa compared to twice-daily timolol.

Separately, Aerie informed that it has withdrawn the Rhopressa NDA (new drug application) that was filed in September as a third party manufacturing facility in Tampa, FL was not ready ready for pre-approval inspection by the FDA.

The company anticipates resubmitting Rhopressa New Drug Application (NDA) in Jan 2017 after the finished product contract manufacturer notifies it of their readiness for the FDA's pre-approval inspection.

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 being developed for IOP in patients with glaucoma or ocular hypertension. 

AERIE PHARMACT Price, Consensus and EPS Surprise


AERIE PHARMACT Price, Consensus and EPS Surprise | AERIE PHARMACT Quote

Our Take

The wider-than-expected loss in the third 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.

Aerie currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Infinity Pharmaceuticals, Inc. INFI, ARIAD Pharmaceuticals Inc. ARIA and Exelixis, Inc. EXEL. Infinity sports a Zacks Rank #1 (Strong Buy), while ARIAD and Exelixis carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 but remained unchanged for 2017 over the last 60 days. The company has posted positive surprises in  the four trailing quarters with an average beat of 67.62%.

ARIAD  has an average beat of 153.54%.

Exelixis’ loss estimates narrowed from 71 cents to 61 cents for 2016 and improved from loss of 16 cents to earnings of 4 cents for 2017 over the last 60 days. The company has posted positive surprises twice in the four trailing quarters with an average beat of 9.1%.

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