Should Investors Consider Aerie Pharma? Print E-mail
By Brian Wilson   
Thursday, 26 June 2014 09:35

Aerie Pharmaceuticals (AERI) is an ophthalmology product developer that focuses on products that treat glaucoma – an progressive eye condition that leads to damage of the optic nerve and vision loss.

For the most part, the only way to treat glaucoma is to reduce the overall pressure in the eye

There are currently 3 wholly-owned products in its portfolio:


-          Rhopressa, a Phase 3-ready candidate based on a mechanism that targets Rho Kinase (“ROCK”) and norepinephrine transporter (“NET”) to lower intraocular pressure. Both of these biological targets are novel, meaning that current drugs do not


 

 -          Roclatan, a combination of Rhopressa and latanoprost - a prostaglandin analogue that is already used very widely to reduce intraocular pressure in glaucoma patients


 

-          AR-13533, a second-generation ROCK/NET inhibitor that bypasses an inefficient step of the Rhopressa mechanism and could generate superior results

 

The newest data that Aerie may be onto something with its Rhopressa/latanoprost combination, because the 297-patient phase IIb trial did succeed in proving efficacy of the product with statistical significance. From the press release:

  • RoclatanTM achieved its primary efficacy endpoint of statistically significant superiority over each of its components on day 29. The Phase 2b 28-day clinical trial included 297 patients. The baseline intraocular pressures (IOPs) tested in the study ranged from 22 to 36 millimeters of mercury (mmHg). RoclatanTM lowered mean diurnal IOP on day 29 from 25.1 mmHg at baseline to 16.5 mmHg, a 34 percent decrease in IOP. RoclatanTM mean diurnal IOP reduction on day 29 was approximately 2 mmHg greater than latanoprost.
  • RoclatanTM efficacy exceeded that of latanoprost, the most widely prescribed glaucoma drug, by 1.6 to 3.2 mmHg across each time point evaluated during the study (8am, 10am, 4pm  on days 8, 15 and 29). These results were statistically significant at all time points with p-values less than 0.05.

So not only were the long-term intraocular pressure efficacy statistics better in the Roclatan arm than the latanoprost arm, but they materialized faster. Because glaucoma does continuous damage to the eye (and the sensitive bundles of nerve cells making up the optic nerve), this is an important factor that increases the commercial viability of this product.


If these results can be replicated in Phase III trials, which will enroll 1300 patients instead of 297, we expect serious attention from physicians who are currently using latanoprost alone to treat intraocular pressure / glaucoma.


On top of yesterday’s the solid data, there are a few other things we like about the stock. High institutional ownership, a high share price (on the Nasdaq) which allows for additional institutional acquisition, and a management/board roster that doesn’t send up any red flags. The company is also holding about $65 M in cash, which should be enough for another 2 years of R&D.


Aerie has also been off the radar since its IPO in October 2013, which is a good thing for those who are interested in the stock today. If the stock increases visibility, we’d expect higher volume and a higher enterprise valuation based on its pipeline.

AERI may pull back a little bit if traders decide to take profits from the 70% rally we saw in the last month, but the strong interest in this stock and the lack of need for an ATM financing makes this a big potential winner.




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