What happened

In response to the company reporting data from its late-stage Mercury 2 trial, shares of Aerie Pharmaceuticals (NASDAQ:AERI), a clinical-stage biotech focused on diseases of the eye, rose by 33% as of 11:45 a.m. EDT on Thursday.

So what

Aerie's Mercury 2 trial was a 90-day phase 3 study designed to evaluate its product candidate Roclatan as a hopeful treatment for glaucoma. Roclatan is an eye drop that combines another Aerie drug called Rhopressa with latanoprost, the latter of which is the current standard-of-care treatment for glaucoma. 

Data from the Mercury 2 study showed that Roclatan was able to achieve its primary endpoint of demonstrating statistical superiority over both Rhopressa and latanoprost when used as monotherapies. Specifically, Roclatan lowered intraocular eye pressure (IOP) by one to three mmHg more than either latanoprost or Rhopressa did on their own.

doctor looking into a patient's eye

Image source: Getty Images.

What's more, discontinuation rates for both Roclatan and Rhopressa were roughly 10% each. That represents lowest discontinuation rates that the company has seen across all of its phase 3 trials involving the two drugs. In addition, there were no drug-related serious or systemic adverse events for any of the treatment groups.

Given the positive efficacy and safety news, it is easy to understand why the markets are cheering.

Now what

Estimates show that 3 million people in the U.S. alone suffer from glaucoma. That number skyrockets to 60 million on a worldwide basis. Given the numbers and Aerie's strong clinical data, it is certainly possible that both Roclatan and Rhopressa could both go on to generate hundreds of millions in worldwide sales. 

Of course, several regulatory hurdles still need to be overcome before the company will even get a chance to market these drugs to patients. Rhopressa is currently pending Food and Drug Administration approval and a go/not-go decision is expected later this year. As for Roclatan, management is waiting on data from an ongoing 12-month safety trial before potentially submitting the drug for approval. That data is expected in the third quarter of this year, which puts the drug on track for submission in early 2018 if everything goes according to plan.

Given the terrific clinical data that we've seen thus far, the odds look favorable that both Roclatan and Rhopressa will ultimately find their way to market. That makes Aerie a great stock for biotech investors to put on their watchlist. 

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.