What: After reporting positive phase 3 results and outlining the timing for an FDA filing for approval of its glaucoma drug, shares in Aerie Pharmaceuticals (NASDAQ:AERI) shot higher by 74% earlier today on tremendous volume.
So what: Aerie Pharmaceuticals is a clinical-stage company that is developing Rhopressa, a medicine delivered via eye drops that can reduce intraocular pressure associated with glaucoma or ocular hypertension.
In its phase 3 Rocket 2 trial, once-daily Rhopressa met its primary endpoint of demonstrating non-inferiority to twice-daily timolol, a generic therapy that is widely used in this patient population.
Following Rhopressa's phase 3 success, the company awaits one year safety results from Rocket 2, which should be available either by the end of this year or by early next year. If that safety data is solid, then a filing for Rhopressa's approval with the FDA could occur by the middle of next year.
Now what: The positive Rocket 2 results help restore confidence in Aerie Pharmaceuticals that was lost following the release of disappointing phase 3 results from its Rocket 1 trial earlier this year. In Rocket 1, Rhopressa failed to meet its primary endpoint of non-inferiority to timolol.
After the company analyzed its Rocket 1 results, it adjusted the criteria for patients to be included in Rocket 2 to those with intraocular pressure of between 20 mmHg and 25 mmHg -- a patient population that comprises roughly 80% of all glaucoma patients and for which Rhopressa successfully demonstrated non-inferiority to timolol in Rocket 1.
Based on Rocket 2's results, revising the endpoint was the right move by Aerie Pharmaceuticals. If positive safety data allows for a mid year filing for approval in 2016, then Aerie Pharmaceuticals could begin generating sales in 2017.
That's a pretty favorable timeline, but investors should bear in mind that although Aerie Pharmaceuticals has previously indicated that cash on hand should fund its operations through 2017, it's not clear if that belief reflects spending that would need to be made -- absent a licensing deal -- to prepare it to commercialize Rhopressa. If it doesn't, then a dilutive stock offering could be coming -- especially in light of the dramatic increase in the company's shares today.