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Why Is Aerie (AERI) Down 7.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Aerie Pharmaceuticals (AERI). Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

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

Aerie's Q1 Loss Wider Than Expected, Revenues Miss

Aerie Pharmaceuticals incurred a loss of 72 cents per share in the first quarter, wider than the Zacks Consensus Estimate of a loss of 69 cents but narrower than the year-ago loss of 84 cents.

Revenues came in at $23 million, which increased from $20.3 million in the year-ago quarter but missed the Zacks Consensus Estimate by 1.64%. Total revenues came from sales of two approved drugs — Rhopressa and Rocklatan.

Quarter in Detail

Wholesaler shipments totaled 257,000 bottles in the quarter under review, down from 307,000 bottles in the previous quarter.

We remind investors that the company’s first drug, Rhopressa (netarsudil ophthalmic solution), has been approved for the reduction of elevated intraocular pressure (“IOP”) in patients with open-angle glaucoma or ocular hypertension. Aerie’s second drug, Rocklatan, a once-daily, quadruple-action, fixed-dose combination of Rhopressa and Pfizer’s Xalatan, has been approved to reduce elevated IOP in patients with open-angle glaucoma or ocular hypertension.

Rhopressa currently has commercial coverage for 90% of lives and market access for 89% of lives covered under Medicare Part D plans. Commercial coverage for Rocklatan represents 89% of covered lives.    

Total operating expenses (excluding stock-based compensation expenses) in the reported quarter were $42.2 million, down from the year-ago quarter’s $48.1 million.

Recent Updates

Aerie’s phase IIb study for its dry eye product candidate, AR-15512, continues to progress. The company currently expects top-line results from this study, COMET-1, in the third quarter of 2021. The study was initiated in October 2020 and is powered as a phase III study.

Aerie continues to evaluate the clinical and regulatory pathways for phase III studies on AR-1105 (dexamethasone steroid implant) in both the U.S. and European markets.

Meanwhile, Investigational New Drug Application (IND)-enabling preclinical studies are underway for AR-14034 SR, a sustained-release implant containing the pan-VEGF inhibitor, axitinib, formulated in a unique bio-erodible polymer blend.

The first-in-human clinical trial on AR-13503 SR (Rho kinase and protein kinase C inhibitor sustained-release implant) continues to progress. Aerie currently expects to complete the dose-escalation safety evaluation with the current implant design in the first quarter of 2022.



 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Aerie has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Aerie has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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