AERI : NASDAQ : US$19.82
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
NEW PH1/2 LOW IOP DATA REAFFIRMS POTENTIAL FOR SUPERIOR EFFICACY,
SAFETY; RAISING TARGET TO $28
Reiterate BUY, raising price target to $28 on AR-13324 increased
potential in open-angle glaucoma. We think ROCK/NET inhibitor 13324
may become a leading drug for glaucoma. We think Ph3 13324 data and
Ph2 comboTx PG324 data expected 2015 will be positive. We are raising
our peak sales estimate to $700M from $600M, increasing our pNPVbased
target to $28 from $19.
Strong 13324 efficacy from new Ph1/2 data in low IOP glaucoma:
underserved, yet large market where effective new drugs are
needed. We think the 5mmHg reduction in low IOP patients after 8
days Tx is encouraging and may drive strong uptake in the planned
Ph3s (to enroll patients down to 21mmHg) starting Q2E. We see
13324’s clean safety, low/absent systemic exposure and once-daily
dosing as compelling differentiators from current glaucoma Tx’s.
New data (n=18) supports higher peak sales estimates. Patients not
currently on Tx (due to lack of low IOP efficacy or AEs of current
Tx’s) may get 13324, effectively expanding the addressable market.
We updated our model to reflect the potential stronger penetration
in low IOP and Timolol-intolerant patients and arrived at a
combined peak sale of $700M+ across two 13324 molecules.
We still see significant potential upside to the stock. Actual US
glaucoma patients may number closer to 3.5M vs. the 2.5M
currently known and we think Dx rates may increase faster than
expected with better awareness and Tx options.
We continue to expect timely enrollment of Ph2b PG324 study in Q1,
Ph3 13324 studies in Q2. This would drive Ph3 PG324 data in late
2014 and Ph3 13324 data in 2015.