Aerie Pharmaceuticals

AERI : NASDAQ : US$10.61
BUY 
Target: US$19.00

COMPANY DESCRIPTION:
AERI is a clinical-stage pharmaceutical company focused on the treatment of glaucoma (one of the largest segments in the global ophthalmic market) and other eye diseases. Its product candidates are the dual-action AR- 13324 and triple-action PG324.

Life Sciences — Biotechnology
EAGLE EYE FOR VALUE; INITIATING WITH BUY, $19 PRICE TARGET
Investment recommendation
Initiating coverage with BUY rating, $19 target on AR-13324’s potential in open-angle glaucoma as a monotherapy and as part of PG324 combotherapy. We believe AR-13324, a novel ROCK/NET inhibitor, may become one of the most versatile drugs for open-angle glaucoma. We think Ph3 AR-13324 data and Ph2 PG324 data expected in 2015 will be positive, showing good efficacy and safety. We estimate $600M peak sales across both drugs.
Investment highlights
 AR-13324 may become the most versatile, widely used open-angle glaucoma drug. Open-angle glaucoma (OAG) is optical nerve damage and vision loss caused by high intra-ocular pressure (IOP), the result of inadequate fluid drainage through the trabecular meshwork (TM), the eye’s primary drain. AR-13324 is the most advanced ROCK/NET inhibitor in development, the only class that targets the TM. It also reduces fluid inflow. AR-13324 Ph3 trials are to start in mid-2014 (data H2/15). Ph2 data from combo product PG324 is due in H1/15.
 Ph2 AR-13324 data: potential for once-daily dosing, excellent safety. Ph2 data suggest AR-13324 can lower IOP by 5-6mm Hg with good  safety. Ph3 data may show similar efficacy, especially in patients with low IOP (~26 mm Hg) where current glaucoma drugs are weak.
Unlike popular current drugs like beta-blockers, AR-13324 does not have systemic side effects. Once-daily dosing of AR-13324 may allow for less eye redness as opposed to most drugs.
 ComboTx PG324 represents another Tx option for OAG.
Prostaglandin analogues (PGAs) are another popular glaucoma drug class, the only drugs that are also once-daily. Their mechanism is complementary to AR-13324, supporting combination therapy. Most patients continue to deteriorate despite a cocktail of current drugs, indicating a need for new drug options.

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