RBC Capital Comments Following Weakness in Shares of Aerie Pharma (AERI)

RBC Capital maintained an Outperform rating on Aerie Pharma (NASDAQ: AERI) with a price target of $50. Analyst Adnan Butt said he received a number of queries related to today's weakness, and concerns about adverse event details from Rhopressa Phase 3s. Overall, he thinks Rhopressa should be approvable since most side effects are mild. He also noted that "timolol has its own issues."

"Given the pullback today after a Phase 3 poster discussing Rhopressa Rocket 1 and Rocket 2 studies was posted, we received several queries. Mostly they focused on Rhopressa’s side effects being worse than timolol's and whether or not that could raise the bar for approval. In the end, we think Rhopressa should be approvable because most side effects are mild, there are no SAEs, FDA did not raise concerns at the pre-NDA meeting, and the FDA appears willing to let new therapies for glaucoma reach the market, and really none of this would matter much if the Roclatan Phase 3 study (Mercury 1) meets its primary endpoint in 3Q:16 with a side effect profile that is not too dissimilar from what we have seen already," said Butt.

Discussing Rhopressa safety vs. timolol, the analyst said, "On its long-term Rocket 2 update, AERI reported conjunctival hyperemia incidence of ~50% and other ocular adverse events in ~5-23% of patients. Phase 3 poster shows hyperemia (eye redness) at 50-53% for Rhopressa vs. 8-11% for timolol, conjunctival hemorrhage at 13-15% vs. 0-1%, blurred vision at 5-7% vs. 1-3%, and reduced visual acuity at 4% vs. 1-2%, among others. These are in line with the top-line release 2+ weeks ago and also mentioned on other drug labels. Most importantly there were no drug related serious adverse events (SAEs). Furthermore, while Rhopressa has no systemic side effects, Rocket 2 showed a stat sig reduction in heart rate for patients on timolol. We think side effects are mostly mild (mean hyperemia score is none to mild), none are SAEs, and timolol has its own issues."

Butt added, "According to AERI, it has had several interactions with the FDA including a pre-NDA meeting, and safety has been discussed out to 3-months and is not an issue for the FDA at this time. Two Phase 3 studies are completed but several are ongoing and planned and, in our view, a big safety risk would likely have stopped or delayed progress."

For an analyst ratings summary and ratings history on Aerie Pharma click here. For more ratings news on Aerie Pharma click here.

Shares of Aerie Pharma closed at $17.63 yesterday.

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