Image source: Steve Jurvetson via Flickr.

What happened

After reporting positive phase 3 trial results for its glaucoma drug Roclatan, shares in Aerie Pharmaceuticals (NASDAQ:AERI) skyrocketed 54% at 12:30 p.m. EST.

So what?

The market for lowering intraocular eye pressure (IOP) in glaucoma patients is worth $2.2 billion annually in the United States, and Aeria Pharmaceuticals' Roclatan phase 3 data suggests it could be in position to capture a big share of that market if it's eventually approved.

Roclatan is a next-generation therapy that combines together the widely used latanoprost, a prostaglandin analogue (PGA), with Aerie Pharmaceuticals' first-generation IOP drug, Rhopressa.  

Aerie Pharmaceuticals recently filed a new drug application for once-daily Rhopressa as an adjunct therapy to PGA after trials demonstrated it's as effective as the twice-daily beta blocker timolol. Beta blockers account for 14% of the U.S. glaucoma market.

In Roclatan's study, the drug outperformed both Rhopressa and latanoprost monotherapy in reducing IOP. The study showed that Roclatan's efficacy was 1 to 3 mmHg greater than either latanoprost or Rhopressa.

Image source: Aerie Pharmaceuticals.

Roclatan was also well tolerated, with the most common adverse event being hyperemia, or eye redness, which was scored as mild for the "large majority" of patients. 

Now what?

Rhopressa could win FDA approval next year, but it's Roclatan that could be the bigger needle-mover for Aerie Pharmaceuticals over time.

Rhopressa's best shot at winning market share is in patients with IOP of between 20 and 25 mmHg who don't respond to PGA therapy. However, Roclatan targets patients with IOP below 36 mmHg, and that means it could be used in most glaucoma patients.

A second phase 3 study of Roclatan is ongoing, and a filing for its approval hinges on that study backing up the findings from this first study. If it does, an application for Roclatan's approval could be heading to the FDA in the second half of 2017.

Aerie Pharmaceuticals' success so far in targeting this market makes it intriguing, but investors should remember there's no guarantee of a Rhopressa approval -- or that Roclatan's second study will pan out. Nevertheless, the market opportunity in glaucoma is big and growing thanks to aging baby boomers, and that makes this stock one worth considering by risk-tolerant investors. After all, even after this move up in shares, the company's market cap is still only $918 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.