Aerie Gets Lukewarm Reception, Cuts IPO Price to $10 Per Share

Xconomy New York — 

Aerie Pharmaceuticals wanted a $68 million haul when it set the price range for its IPO last week. It came close to that number, but it had to do some tinkering to get there.

Bedminster, NJ-based Aerie priced its IPO, selling investors 6.72 million shares at $10 apiece and raising about $67.2 million before discounts due to its underwriters. That figure comes in below the $12 to $14 per share range Aerie set last week. Aerie also sold about 1.47 million more shares than the 5.25 million it had planned to offer in the IPO.

Aerie will begin trading on the Nasdaq today under the ticker symbol “AERI.”

The total adds to the $63.5 million Aerie has raised since its inception in 2005. Alta Partners and TPG Biotech are the biotech’s largest shareholders, each owning a 27.06 percent stake prior to the offering. They are followed by Clarus Ventures (21.77 percent) and Sofinnova Venture Partners (19.27 percent).

RBC Capital Markets, Stifel, Nicolaus & Co., Canaccord Genuity, and Lazard Capital Markets were Aerie’s underwriters.

Aerie is using the cash to develop a group of glaucoma drugs. Glaucoma is when fluid builds up inside the eye, putting pressure on and ultimately damaging the optic nerve. If untreated, patients can gradually lose their vision and eventually go blind.

Glaucoma patients are typically prescribed eye drops called prostaglandin analogues, or PGAs, many of which are generic. They can also end up taking drops known as beta blockers or adrenergic agonists, which either boost the effects of PGAs or serve as an alternative therapy, but at the cost of more side effects and multiple doses per day. All of these drugs work either by slowing down the eye’s rate of fluid production or helping fluid leave the eye through its main drain (the trabecular meshwork) or secondary drain (uveoscleral pathway).

While PGAs help the eye drain itself, though, they don’t directly target the trabecular meshwork—the diseased tissue experts think is responsible for the fluid buildup. This is where Aerie comes in. Aerie is one of at least three companies trying to develop drugs that do (the others being Lexington, MA-based Inotek Pharmaceuticals and Belgium-based Anakem Therapeutics). The idea is that drugs using this approach can, at minimum, serve as an add-on therapy to PGAs like latanoprost (Xalatan), and potentially compete with them.

Aerie is only looking at its first experimental drug, AR-13324, as an add-on therapy to PGAs. The drug is a once-daily drop designed to block two targets—rho kinase, and the norepinephrine transporter—that are implicated in fluid production, and drainage, in the eye. Aerie is trying to show that this drug is just as effective, and more tolerable to use, than other non-PGA glaucoma drugs, which account for about half the total prescription filled for the disease in the U.S. and Europe, according to the company’s IPO prospectus.

Aerie also has a second drug candidate behind AR-13324 called PG324, which is a combination of the AR-13324 with latanoprost, the most commonly-prescribed PGA on the market. Aerie owns all of the rights to its drugs, and plans to build a sales team and kick off a late-stage trial for AR-13324 in 2014 with the help of the IPO cash. It also aims to begin a Phase 2b study of PG324 early next year.

Still, Aerie has competition on its heels. Inotek, for instance, is developing a drug called trabodenoson designed to work via a different mechanism, and is trying to show that that drug can compete directly with PGAs. It’s planning to start a mid-stage clinical trial of that drug this year.

Aerie is headed by Vicente Anido, Jr., the former CEO of Ista Pharmaceuticals, an eye care company that was bought by Bausch & Lomb for $500 million in 2012.