Aerie Pharmaceuticals: Guidance Is Unachievable After Failed Drug Launches; 70%+ Downside


  • Sell-side estimates for this quarter’s revenue are too high and have begun to be cut.
  • The guidance of 110m in revenue for the year is very unlikely to be achieved, which will result in even higher than expected cash burn.
  • Sales of Rocklatan and Rhopressa to pharmacies and distributors exceed prescriptions, creating a demand headwind for the future.
  • Strategic acquirers are unlikely to be interested in buying AERI in the near future.

AERI sell side estimates are too high

Both Rhopressa and Rocklatan are significantly underwhelming street expectations. Guidance is too high and will need to be cut.

I’ll begin with an analysis this quarter’s sales of Rhopressa and Rocklatan using weekly prescription data from Bloomberg / Symphony Health. The dates do not perfectly line up with quarter ends, but the difference is minimal and the monthly data for June is not available yet.

Between the weeks ended January 4, 2019, and March 29, 2019, Bloomberg reports that there were 90,930 total retail prescriptions for Rhopressa. Since the company reported $10,852,000 in revenue for the quarter, that implies a $119.34 of net revenue per retail prescription reported on Bloomberg. Note that the Bloomberg data is an estimate of only retail pharmacy sales. However, I think the data is good enough for our purposes and it’s reasonable to hold this multiplier constant for the next quarter – this is equivalent to assuming that the share of total prescriptions captured by Bloomberg remains constant from this quarter to the next. It is also important to remember that the number of bottles sold is higher than the number of prescriptions.

For the first two months of Q2 2019, Bloomberg reports that there were 64,724 prescriptions for Rhopressa and 1,300 prescriptions for Rocklatan. For the first 4 weeks of June, Bloomberg reports 30,369 Rhopressa Prescriptions and 3,202 Rocklatan Prescriptions. The data series ends on June 28, but the final two days of the month were Saturday and Sunday so the number of missing prescriptions should be minimal.

As for revenue per prescription, I assume that the $119.34 revenue/prescription number from last quarter applies to Rhopressa, and add a $15 premium for Rocklatan based on Vincente Adino’s comments on the Q4 2018 earnings call: “From a pricing perspective, we do expect the price

Disclosure: I am/we are short AERI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Leave a Reply

Your email address will not be published. Required fields are marked *