Aerie Pharmaceuticals
Aug 6, 2014

Aerie Pharmaceuticals Reports Second Quarter 2014 Financial Results and Provides Business and Product Development Update

RhopressaTM Phase 3 Registration Trials Have Commenced, Three-Month Efficacy Results Expected Mid-2015; Potential to File New Drug Application by Mid-2016

After Successful Phase 2b Results, RoclatanTM Phase 3 Enabling Activities in Progress

Conference Call and Webcast Today, August 6, at 5:00 p.m. ET

BEDMINSTER, N.J. & RESEARCH TRIANGLE PARK, N.C. & NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- Aerie Pharmaceuticals, Inc. (NASDAQ:AERI), a clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class glaucoma therapies, today reported financial results for second quarter 2014 and provided an update on the Company's business highlights.

Aerie Highlights

"Aerie has made significant progress since the first quarter. On the heels of reporting very impressive Phase 2b clinical trial results for quadruple-action RoclatanTM in late June, we have commenced our Phase 3 registration trials for triple-action RhopressaTM in the United States and are preparing to commence our safety-only trial in Canada by the end of this quarter. Our Phase 2b trial for RoclatanTM not only demonstrated the product's potential to be the most efficacious therapy in the glaucoma market, but we also received additional promising data from the RhopressaTM arm of the RoclatanTM study. We expect RhopressaTM Phase 3 efficacy data in mid-2015, and following the strong Phase 2b RoclatanTM clinical performance we have begun Phase 3 preparatory activities for this very promising product," said Vicente Anido, Jr., Ph.D., Chairman and Chief Executive Officer.

Dr. Anido continued, "We are at the very early stages of initiating partnering discussions for Japan and Europe now that we have positive RoclatanTM Phase 2b data in hand. We continue to expect to commercialize our products in North America with our own sales force. Now more than ever, we believe Aerie has the potential to become a market-leading ophthalmic company."

Product Update

Aerie's first-in-class product candidates are all single drop, once-daily medications that are well-tolerated and have shown no systemic drug-related adverse events.

Triple-Action Rhopressa™

RhopressaTM is a novel triple-action eye drop that we believe, if approved, would become the only once-daily product available that specifically targets the trabecular meshwork (TM), the eye's primary fluid drain and the diseased tissue responsible for elevated intraocular pressure (IOP) in glaucoma. Recent preclinical results have demonstrated that RhopressaTM also lowers episcleral venous pressure (EVP), which contributes approximately half of IOP in healthy subjects. Further, RhopressaTM provides an additional mechanism that reduces fluid production in the eye and therefore lowers IOP. Biochemically, RhopressaTM is known to inhibit both Rho Kinase (ROCK) and norepinephrine transporter (NET).

In the Company's Phase 2b clinical trial, which was successfully completed in June 2013, RhopressaTM demonstrated a strong IOP-lowering effect, with mean IOP reductions of 5.7 and 6.2 mmHg on days 28 and 14, respectively. In addition, RhopressaTM demonstrated a consistent mean IOP-lowering effect irrespective of the baseline IOPs of the patients entered into the trial. This differentiates RhopressaTM from currently marketed IOP-lowering agents such as market-leading prostaglandins (PGAs) and beta blockers, which have their highest effect at higher baseline IOPs, while losing efficacy as the baseline diminishes, as shown in published studies. This is significant given that the majority of glaucoma patients have low to moderately elevated IOPs of 26 mmHg or below at the time of diagnosis. In the RoclatanTM Phase 2b trial recently completed in June 2014, RhopressaTM performed with similar results as in its Phase 2b trial completed in June 2013 and, in addition, demonstrated additive efficacy when used in combination with latanoprost, the most commonly prescribed PGA.

Pending successful advancement of the Phase 3 registration studies, three-month efficacy results are expected to be released in mid-2015. If the trials are successful, the Company expects to submit an NDA filing by mid-2016.

Quadruple-Action Roclatan™

Roclatan™ is a once-daily eye drop that combines our triple-action Rhopressa™ with latanoprost, a prostaglandin analogue that is the most widely prescribed glaucoma drug. If approved, we believe that Roclatan™ would be the first glaucoma product to lower IOP through all known mechanisms: (i) increasing fluid outflow through the TM, the eye's primary drain, (ii) increasing fluid outflow through the uveoscleral pathway, the eye's secondary drain, (iii) reducing fluid production in the eye and (iv) reducing EVP.

We believe that Roclatan™, if approved, would be the only glaucoma product that covers the full spectrum of known IOP-lowering mechanisms, giving it the potential to provide a greater IOP-lowering effect than any currently approved glaucoma product. Therefore, we believe Roclatan™, if approved, could compete in both the PGA and non-PGA markets and become the product of choice for patients requiring maximal IOP lowering, including those with IOPs in excess of 26 mmHg and those who present with significant disease progression despite currently available therapies.

A successful 28-day Phase 2b clinical trial for Roclatan™ was completed in June 2014, and preparatory steps for Phase 3 registration trials are in process.

Second Quarter 2014 Financial Results

As of June 30, 2014, the Company had cash, cash equivalents and investments of $56.6 million. For the quarter ended June 30, 2014, the Company reported a net loss attributable to common stockholders, as measured in accordance with U.S. generally accepted accounting principles ("GAAP"), of $11.8 million, or $0.49 per share, compared to $6.5 million and $6.59 per share for the second quarter 2013, when the Company was still privately held. The weighted average number of shares of common stock outstanding utilized in the calculation of net loss per common share was 23,893,651 and 981,644 for the second quarter 2014 and 2013, respectively. The increase in the weighted average number of shares of common stock outstanding is attributable to changes to the Company's capital structure in connection with the IPO in October 2013.

The $11.8 million net loss attributable to common stockholders for the second quarter 2014 includes $11.8 million in operating expenses, reflecting $6.7 million in research and development expenses and $5.1 million in general and administrative expenses. Included in the $11.8 million net loss is $2.4 million of non-cash charges representing stock-based compensation expense included in operating expenses. When stock-based compensation expense is excluded, the adjusted operating expenses of $9.5 million include adjusted research and development expenses of $6.5 million and adjusted general and administrative expenses of $3.0 million. Total adjusted net loss was $9.4 million.

The $6.5 million net loss attributable to common stockholders for the second quarter 2013 includes $5.1 million in operating expenses, reflecting research and development expenses of $3.2 million and general and administrative expenses of $1.9 million, non-cash interest expense and certain valuation-related losses of $1.2 million included in other income (expense), net and convertible preferred stock-related charges of $0.1 million. Excluding non-cash stock-based compensation expenses of $0.2 million, the adjusted operating expenses for second quarter 2013 were approximately $4.9 million, reflecting adjusted research and development expenses of $3.2 million and adjusted general and administrative expenses of $1.7 million. Total adjusted net loss was $4.9 million.

The higher operating expenses in second quarter 2014 as compared to second quarter 2013 reflect increased clinical and non-clinical preparatory activities for Rhopressa™, increased clinical activity for Roclatan™, increased research and development supporting activities and growth in the business as a result of having become a public company in October 2013.

For the six months ended June 30, 2014, the Company reported a net loss attributable to common stockholders, as measured in accordance with GAAP, of $18.5 million, or $0.78 per share, compared to $10.4 million and $10.68 per share for the six months ended June 30, 2013. The weighted average number of shares of common stock outstanding utilized in the calculation of net loss per common share was 23,806,009 and 973,460 for the six months ended June 30, 2014 and 2013, respectively.

The $18.5 million net loss attributable to common stockholders for the six months ended June 30, 2014 includes $20.8 million in operating expenses, reflecting $12.0 million in research and development expenses and $8.8 million in general and administrative expenses, partially offset by $2.3 million in proceeds from the sale of a New Jersey state tax benefit, which is recorded as income in other income (expense), net. Included in the $18.5 million net loss is $4.3 million of non-cash charges representing stock-based compensation expense included in operating expenses. When stock-based compensation expense is excluded, the adjusted operating expenses of $16.5 million include adjusted research and development expenses of $11.2 million and adjusted general and administrative expenses of $5.3 million. Total adjusted net loss was $14.2 million.

The $10.4 million net loss attributable to common stockholders for the six months ended June 30, 2013 includes $9.7 million in operating expenses, reflecting research and development expenses of $6.3 million and general and administrative expenses of $3.4 million. Additionally, it includes non-cash interest expense and certain valuation-related losses of $1.7 million, partially offset by $1.3 million in proceeds from the sale of a New Jersey state tax benefit included in other income (expense), net and convertible preferred stock-related charges of $0.3 million. Excluding non-cash stock-based compensation expenses of $0.4 million, the adjusted operating expenses for the six months ended June 30, 2013 are approximately $9.3 million, reflecting adjusted research and development expenses of $6.3 million and adjusted general and administrative expenses of $3.0 million. Total adjusted net loss was $8.1 million.

The higher operating expenses for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 reflect increased clinical and non-clinical preparatory activities for Rhopressa™, increased clinical and non-clinical activity for Roclatan™, increased research and development supporting activities and growth in the business as a result of having become a public company in October 2013.

Conference Call / Web Cast Information

Aerie management will host a live conference call and webcast at 5:00 p.m. Eastern Time today to discuss the Company's financial results and provide a general business update.

The live webcast and a replay may be accessed by visiting Aerie's website at http://investors.aeriepharma.com. Please connect to the Company's website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. Alternatively, please call (888) 734-0328 (U.S.) or (678) 894-3054 (international) to listen to the live conference call. The conference ID number for the live call is 69796774. Please dial in approximately 10 minutes prior to the call. Telephone replay will be available approximately two hours after the call. To access the replay, please call (855)-859-2056 (U.S.) or (404) 537-3406 (international). The conference ID number for the replay is 69796774. The telephone replay will be available until August 13, 2014.

About Aerie Pharmaceuticals, Inc.

Aerie is a clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class glaucoma therapies. The Company is commencing two Phase 3 registration trials in the United States, named "Rocket 1" and "Rocket 2," where the primary efficacy endpoint will be to demonstrate non-inferiority of IOP lowering for RhopressaTM compared to timolol, along with a third Phase 3 registration safety-only trial, named "Rocket 3," in Canada. The Company also recently completed a Phase 2b clinical trial where RoclatanTM met the primary efficacy endpoint, demonstrating the statistical superiority of RoclatanTM to each of its components.

Forward-Looking Statements

This press release contains forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may, in some cases, use terms such as "predicts," "believes," "potential," "proposed," "continue," "estimates," "anticipates," "expects," "plans," "intends," "may," "could," "might," "will," "should" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the success, timing and cost of our ongoing and anticipated preclinical studies and clinical trials for our current product candidates, including statements regarding the timing of initiation and completion of the studies and trials; our expectations regarding the clinical effectiveness of our product candidates and results of our clinical trials; the timing of and our ability to obtain and maintain U.S. Food and Drug Administration or other regulatory authority approval of, or other action with respect to, our product candidates; our expectations regarding the commercialization of our product candidates; our expectations related to the use of proceeds from our initial public offering; our estimates regarding anticipated capital requirements and our needs for additional financing; the potential advantages of our product candidates; and our ability to protect our proprietary technology and enforce our intellectual property rights. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change, and depend on regulatory approvals and economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. We discuss many of these risks in greater detail under the heading "Risk Factors" in the quarterly and annual reports that we file with the Securities and Exchange Commission (SEC). Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this press release. Any forward-looking statements that we make in this press release speak only as of the date of this press release. We assume no obligation to update our forward-looking statements whether as a result of new information, future events or otherwise, after the date of this press release.

Non-GAAP Financial Measures

To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures, some of which are discussed above: adjusted net income (loss), adjusted operating expenses, adjusted research and development expenses, adjusted general and administrative expenses, and adjusted other income (expense). For a description of the adjusted calculations and reconciliation to the nearest GAAP measure, please see the "Reconciliation of GAAP Net Loss to Adjusted Net Loss" table in this press release.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

The presentation of these financial measures is not intended to be considered in isolation from, or as a substitute for, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, the adjustments to our GAAP financial measures reflect the exclusion of stock compensation expense, which is recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

 
AERIE PHARMACEUTICALS, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
           
 
JUNE 30, DECEMBER 31,
2014 2013
Assets
Current assets
Cash and cash equivalents $ 27,876 $ 69,649
Short-term investments 28,448
Prepaid expenses and other current assets   930   618
Total current assets 57,254 70,267
Long-term investments 249
Furniture, fixtures and equipment, net 160 132
Other assets, net   39   59
Total assets $ 57,702 $ 70,458
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and other current liabilities $ 4,846 $ 3,482
Total current liabilities   4,846   3,482
Total liabilities   4,846   3,482
Commitments and contingencies
Stockholders' Equity
 
Preferred stock, $0.001 par value; 15,000,000 shares authorized as of
June 30, 2014 and December 31, 2013; None issued and outstanding
 
Common stock, $0.001 par value; 150,000,000 shares authorized as of
June 30, 2014 and December 31, 2013; 23,866,830 and 23,285,549 shares
issued and outstanding as of June 30, 2014 and December 31, 2013,
respectively 24 23
Additional paid-in capital 166,398 162,021
Accumulated other comprehensive loss (13)
Deficit accumulated during the development stage   (113,553)   (95,068)
Total stockholders' equity   52,856   66,976
Total liabilities and stockholders' equity $ 57,702 $ 70,458
 
 
AERIE PHARMACEUTICALS, INC.
(A Development Stage Company)
Statements of Operations and Comprehensive Loss
Unaudited
(in thousands, except share and per share data)
           
 
 
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2014 2013 2014 2013
Operating expenses
General and administrative $ (5,167) $ (1,940) $ (8,779) $ (3,406)
Research and development   (6,676)   (3,173)   (12,046)   (6,328)
Loss from operations (11,843) (5,113) (20,825) (9,734)
Other income (expense), net   29   (1,215)   2,340   (384)
Net loss $ (11,814) $ (6,328) $ (18,485) $ (10,118)
 
Net loss attributable to common stockholders—basic and diluted $ (11,814) $ (6,465) $ (18,485) $ (10,392)
 
Net loss per share attributable to common stockholders—basic and diluted $ (0.49) $ (6.59) $ (0.78) $ (10.68)
 
Weighted average number of common shares outstanding—basic and diluted   23,893,651   981,644   23,806,009   973,460
 
Net loss $ (11,814) $ (6,328) $ (18,485) $ (10,118)
Unrealized gain (loss) on available-for-sale investments   8     (13)  
Comprehensive loss $ (11,806) $ (6,328) $ (18,498) $ (10,118)
 
 
Aerie Pharmaceuticals, Inc.
(A Development Stage Company)
Reconciliation of GAAP Net Loss to Adjusted Net Loss
(Unaudited)
(in thousands)
 
       

THREE MONTHS ENDED

 

SIX MONTHS ENDED

JUNE 30, JUNE 30,
2014   2013 2014   2013
Net loss attributable to common stockholders - basic and diluted:
Net loss attributable to common stockholders - basic and diluted (GAAP) $ (11,814 ) $ (6,465 ) $ (18,485 ) $ (10,392 )
Adjustments:
Stock-based compensation (a) 2,382 237 4,304 401
Change in fair value measurements of warrant liabilities (b) 122 266
Interest and amortization expense related to notes subsequently converted to common equity (c) 1,094 1,387
Accretion related to convertible preferred stock (d)       137         274  
Adjusted Net loss $ (9,432 ) $ (4,875 ) $ (14,181 ) $ (8,064 )
 
Operating expenses:
General and administrative expense:
General and administrative expense (GAAP) $ (5,167 ) $ (1,940 ) $ (8,779 ) $ (3,406 )
Adjustments:
Stock-based compensation (a)   2,145     215     3,452     357  
Adjusted general and administrative expense $ (3,022 ) $ (1,725 ) $ (5,327 ) $ (3,049 )
 
Research and development expense:
Research and development expense (GAAP) $ (6,676 ) $ (3,173 ) $ (12,046 ) $ (6,328 )
Adjustments:
Stock-based compensation (a)   237     22     852     44  
Adjusted research and development expense $ (6,439 ) $ (3,151 ) $ (11,194 ) $ (6,284 )
 
Operating expenses (GAAP) $ (11,843 ) $ (5,113 ) $ (20,825 ) $ (9,734 )
Adjustments:
Stock-based compensation (a)   2,382     237     4,304     401  
Adjusted operating expenses $ (9,461 ) $ (4,876 ) $ (16,521 ) $ (9,333 )
 
Other income (expense):
Other income (expense), net (GAAP) $ 29 $ (1,215 ) $ 2,340 $ (384 )
Adjustments:
Change in fair value measurements of warrant liabilities (b) 122 266
Interest and amortization expense related to notes subsequently converted to common equity (c)       1,094         1,387  
Adjusted other income (expense) $ 29   $ 1   $ 2,340   $ 1,269  
 

Aerie is providing adjusted information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the Company's performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.

Explanation of adjustments:

(a) Stock-based compensation: Exclude the non-cash stock-based compensation.
(b) Change in fair value measurements of warrant liabilities: Exclude the non-cash change in fair value.
(c) Interest and amortization expense related to notes subsequently converted to common equity: Exclude the non-cash interest and amortization expense.
(d) Accretion related to convertible preferred stock: Exclude the accretion related to convertible preferred stock.

Aerie Pharmaceuticals
Richard Rubino, 908-470-4320
rrubino@aeriepharma.com
or
Burns McClellan, Inc., on behalf of Aerie Pharmaceuticals
Angeli Kolhatkar, 212-213-0006
akolhatkar@burnsmc.com

Source: Aerie Pharmaceuticals, Inc.

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